Wheat trade still relies on weather

GRAIN traders have to factor in more and more imponderables when analysing global trends, but weather remains the least predictable and the most significant .

Trevor Harriman of Dalgety Arable said recently that even a Middle East conflict will have less impact on the trade than when the ice thaws at Black Sea ports, releasing up to 500,000 tonnes of wheat under agreements signed prior to the imposition by the EU of the import-limiting TRQ tariff rate system.

While the market has largely accounted for this, there remain major imponderables for the current season and more for the coming crop year, he added.

These include the impact of the same severe weather conditions which closed the Black Sea ports on crops in the Ukraine and Russia. Production in these areas was almost certain to fall back in 2003-2004 crop years, he said, and increases in the US, Canada, Australia and Argentina were by no means certain.

TRQs had certainly damped down the market, he said. The first quarter’s imports - set at 593,000 tonnes - had been 24 times over-subscribed and the system covers a calendar, not crop year. He predicted this would result in some market regains for Britain.

Originally estimated at 597 million tonnes, the final figure for world wheat production in the past season was put at 563 million tonnes. Against this, world consumption is rising, pointing to lower carry-over stocks. Coarse grains, including barley, followed similar trends.

A major unknown is China, now a member of the World Trade Organisation, while EU expansion from next year would mean increased competition for the UK, particularly from Poland.

In the face of all these factors, it was clear that the ability of Britain or, in fact, any country - to set market prices for wheat was severely limited.