UK turns net wheat importer, as ethanol plant demand surges

22.06.2017

The UK is returning to being a net wheat importer this season for only the fourth time in at least 25 years, as the growth in output at the country's bioethanol plants drives consumption to a record high.

The UK farm ministry, Defra, in its first forecast for the country's wheat exports in 2016-17 pegged them at 1.50m tonnes.

That would represent a tumble of 47% year on year, and the weakest figure since the aftermath of the historically wet year of 2012 which devastated the crop that year and, in preventing autumn sowings, undermined output the following year too.

Indeed, data going back 25 years show that apart from 2012-13 and 2013-14, UK exports have only fallen below 1.50m tonnes in one other year, in 2001-02.

Smaller crop, bigger demand

Meanwhile, Defra raised its estimate for UK wheat imports this season by 100,000 tonnes to 1.70m tonnes, a level exceeded only during the 2012-13 and 2013-14 crop years.

Nonetheless, UK inventories were forecast ending this season, which closes at the end of this month, at 2.04m tonnes, down 27% year on year, with supplies tightened by a relatively weak harvest last year, and by growing domestic demand.

"A smaller domestic crop in 2016, combined with a rise in domestic demand… has led to forecast commercial end of season stocks declining," said the AHDB bureau, which is consulted in setting the Defra estimates.

Ethanol needs

UK wheat consumption this season was pegged at a record high of 15.69m tonnes, a rise of 6% year on year.

The increase reflects in particular growth of 10%, to an all-time high of 8.11m tonnes, in demand for human and industrial use, driven by recovery in the UK bioethanol sector.

Indeed, this figure was 12,000 tonnes above a Defra forecast made in March.

"Demand from the bioethanol industry has been revised up. This has more than offset a slight decline in usage by flour millers," the AHDB said.

The comments follow an upgrade by biofuels group CropEnergies in its forecast for full-year profits, based largely on the prospect of increased output at its Ensus plant in the UK, which was mothballed until last year thanks to weak production margins.

Ensus and the nearby Vivergo plant, run by Associated British Foods, both have capacity to use more than 1.0m tonnes of wheat a year, with Ensus also able to utilise other feedstocks, notably corn, too.

Corn for fuel

Indeed, Defra also raised its forecast for human industrial use of corn use by 40,000 tonnes from its March estimate to 548,000 tonnes, a rise of 21% year on year, thanks to demand from the biofuels industry.

The main driving force behind the [upgrade] is an increase in usage by the bioethanol sector," the AHDB said.

"Inclusions of [corn] in animal feed production are expected to remain relatively stable compared to the previous estimate."


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