Milling Wheat Market Outlook - AHDB Cereals & Oilseeds · PDF fileMilling Wheat Market Outlook...

Milling Wheat Market Outlook

Dr Amandeep Kaur PurewalSenior AnalystAHDB/HGCA Market Intelligence

Overview

The Global Picture

UK Situation

Outlook & New Crop Prospects

The Global Picture

Global grain S&D – record breaking productionin 2013/14

1,400

1,600

1,800

2,000

M t

on

nes

Demand Production

* estimated, ** forecast Source: UN’s Food & Agriculture Organisation (FAO)

As a result, prices moved lower – particularlyfor maize

100

120

140

160

180

200

220

£ p

er t

on

ne

UK feed wheat Paris m. wheat Chicago m. wheat Chicago maize

Source: AHDB/HGCA

Global maize S&D – stocks forecast to increase but not out of the woods yet

12

13

14

15

16

17

18

19

20

550

600

650

700

750

800

850

900

950

1,000

2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14*

Sto

cks-

to-u

se r

atio

(%

)

Pro

du

ctio

n &

Dem

and

(M

to

nn

es)

Production Demand World stock-to-use ratio

* forecast Source: USDA

Global wheat S&D – small recovery in global stocks expected

10

15

20

25

30

35

550

570

590

610

630

650

670

690

710

2007/08 2008/09 2009/10 2010/11 2011/12 2012/13* 2013/14*

Sto

cks-

to-u

se r

atio

(%

)

Pro

du

ctio

n &

Dem

and

(M

to

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es)

Production Demand STU


Major exporters’ wheat stocks – US ‘cushion’ continues to be depleted

0

5

10

15

20

25

30

Argentina Australia Canada European Union FSU-12 United States

M t

on

nes

2010/11 2011/12 2012/13 2013/14*


US total wheat export commitments

(Week 1 = start of June; Week 53 = end of May)Source: USDA

5

10

15

20

25

30

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

M t

on

nes

Week

2011/12 2012/13 2013/14

EU wheat export licenses

0

2

4

6

8

10

12

14

16

18

20

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53

M t

on

nes

Week

2011/12 2012/13 2013/14

(Week 1 = start of July; Week 53 = end of June)

Source: European Commission

UK Situation

UK wheat production & demand - stocks, imports and alternative feed grains important

10

11

12

13

14

15

16

17

18

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

M t

on

nes

Harvest year

Domestic demand Production

Source: AHDB/HGCA, Defra

Quality improved compared with last year- but by how much?

Source: Cereal Quality Survey, AHDB/HGCA

2012 2013 Average (2009-2011)

Average (2010-2012)

Specific weight(kg/hl)

69.6 77.0 77.5 75.1

Hagberg (s) 237 314 267 259

Protein (%) 12.5 12.2 11.8 12.1

Quality drives UK milling premiums- 2000-2013

0

5

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15

20

25

30

35

40

45

0 10 20 30 40 50 60

Ex-

farm

bre

ad m

illi

ng

pre

miu

m (

£/t)

% of Group 1 samples meeting full spec (13%, 250s, 76Kg/hl)

2008

2012

2003

20132009

Source: AHDB /HGCA

England & Wales ex-farm prices- volatility comes from the feed base

80

100

120

140

160

180

200

220

240

260

£ p

er t

on

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Bread wheat* Feed wheat

* min. of 13% protein, 250HFN & 76kg/hl Source: AHDB /HGCA

Relative proportions of home-grown/imported wheat milled

60%

65%

70%

75%

80%

85%

90%

0

100

200

300

400

500

600

700

% H

om

e-g

row

n m

ille

d

‘000

To

nn

es

Home-grown wheat milled Imported wheat milled % Home-grown wheat milled

Source: Defra

UK wheat imports and prices

145

165

185

205

225

245

265

285

0

50

100

150

200

250

300

350

Wh

eat

pri

ce (

£/t

on

ne)

Imp

ort

s (‘

000s

to

nn

es)

Imports UK Ex-farm bread wheat Imported German A wheat Canadian milling wheat*

*Canadian No.1 Canada Western Red Spring 13.5%, FOB St Lawrence Source: HMR&C, AHDB/HGCA

Outlook & New Crop Prospects

Wheat S&D outlook

23.5%

24.0%

24.5%

25.0%

25.5%

26.0%

26.5%

27.0%

600

620

640

660

680

700

720

740

2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Sto

cks-

to-u

se r

atio

(%

)

Pro

du

ctio

n &

Dem

and

(M

to

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es)

Production Consumption STU

Source: International Grains Council

2014 forecast wheat harvest area- year-on-year change

Source: International Grains Council

Canada9.9 Mha (-5%)

USA19.4 Mha (+6%)

EU26.1 Mha (+2%)

Russia24.5 Mha (+3%)

Ukraine6.4 Mha (-3%)

N. Africa7.3 Mha (-1%)

Australia13.8 Mha (+2%)

Brazil2.2 Mha (+5%)

Argentina4.0 Mha (+8%)

Global wheat harvest area forecast at 224.2 Mha in 2014,2.5% higher (5.5 Mha) than 2013

China24.3 Mha (+1%)

EU wheat areas to remain strong for harvest 2014

150155160165170175180185190195200

Eu

ro p

er t

on

ne

* January 2014 averages

Reflected in forward futures price curves *

Paris milling wheat

Chicago milling wheat

Source: Strategie Grains, AHDB/HGCA

+23%(back to normal)

+2%

unch

+3%

unch unch

-3%

Summary

Prices have declined as global grain supply has rebounded

Decline in US stocks over recent seasons – a key factor for the global wheat market

Old crop UK milling premiums are supported by the small 2013 crop but capped by EU price levels

Limited issues so far for 2014/5 – large production potential

Thank you

[email protected]

Nitrogen & protein – field and farm variation

Roger Sylvester-Bradley / Richard Weightman ADAS Head of Crop Performance / ADAS Head of Crop Utilisation

Increasing variation: your options?

Avoid the risks

Spread them …OR …

Monitor & Manage them?

Issues

Yield matters most !

Best nitrogen adviceHGCA Guidelines

Evidence of variation … and how to respond

Seasonal trends

Need to re-focus on crop management ?

Applied N, kg/ha

200

100

0

Wheat yield, t/ha

Grain protein, %DM

Wh

eat

yiel

d,

t/h

a

G

rain

pro

tein

, %

‘Yield Enhancement Network’

www.yen.adas.co.uk

milling

Explaining nitrogen

Losses

MineralisationImmobilisation

Crop DemandCrop Demand

Soil SupplySoil Supply

Fertiliser Requirement& Manure

unrecovered N

Fertiliser N requirement (kg/ha) =

Crop N Demand (kg/ha) – SNS (kg/ha)Fertiliser recovery (%)

HGCA guidelines

AnnualN Management Cycle

Steps J-L:Calculate CropN Requirement

Steps A-D:Judge

Crop N Demand

Steps M-V: Schedule & Adjust

N Applications

Step W:Monitor Success

Steps E-I:Judge

Soil N Supply

Variation – what to expect

Between seasons

Between regions

Between farms

Between fields

Within fields

HGCA / LINK ‘MALNA’

Project 3211

Seasonal variation – NIR prediction ?

Coop 2007

Coop 2008

Coop 2009

MALNA 02-05

HM 2009

BW 2009

6

8

10

12

14

16

18

1.3 1.5 1.7 1.9 2.1 2.3

Ear N% at milky ripe

Fin

al g

rain

pro

tein

Ear NIR can help Improves on farm skill

Crop sampling can never be precise Remote sensing may eventually prove best

Predictions from crop sampling are best averaged over fields and farms

Predicting grain protein

Protein %: 10 …..…13 ….….16

Zeltex protein map

Farm variation

Example:

MALNA Project Fengrain & Camgrain

19 milling wheat growers

2007, 2008, 2009

LINK Project LK0990 ‘MALNA’

Grain protein %: ~2 fields per farm in each of 2007, 2008 & 2009

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11

13

15

Farms: in order of average grain protein

RB209 optimum indicator

Market requirement

trial areas within ~2 fields per farm

Implicit N errors, kg/ha

+120

+60

0

-60

-120

Grain protein by farm



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10

11

12

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15

8 9 10 11 12 13

Grain yield by quadrat (t/ha @ 85% DM)

Grain protein (%DM)

Farm averages: each over two fields in each of 3 seasons

Fengrain

Camgrain

Farm variationLINK Project LK0990 ‘MALNA’

Conclusions from MALNA

Significant farm-to-farm variation in protein– Consistent across seasons & fields

Some farms may be getting N use consistently ‘wrong’– How can they check?

…Lodging, yellowing & poor yields … only helpful if very wrong

…Soil mineral N tests … onerous, expensive & imprecise ?

…Grain Protein … best routine measure .. but crude

The best check on N rates may be direct testing– Perhaps using tramline comparisons & yield monitors?

Chessboard trial

normal N trial

In-field variation:Yield, N requirements & Protein

Flawborough, Nottinghamshire UK 2010

Auto-N Project 2010-2014 LINK project LK09134, HGCA project RD-2008-3350Auto-N Project 2010-2014 LINK project LK09134, HGCA project RD-2008-3350

Chessboard trials

2010

2011

2012

Intra-field variation in ‘optimal’ yield

2010

2011

8.2 – 11.5 t/ha

6.5 – 11 t/ha

6.5 – 8.5 t/ha

6.5 – 9 t/ha

7.5 – 11 t/ha

7.7 – 10.8 t/ha

2012

3.3 t/ha

4.5 t/ha3.1 t/ha

2.5 t/ha

3.5 t/ha 2.0 t/ha

Auto-N LINK project LK09134

Protein variation with optimum N for yield

2012

2010

2011

12.8 – 16.5%

9.5 – 13%

6.6 – 11.6%

9 – 16%

10.6 – 13%

11 – 16%

2.4 %

5 % 7 %

3.7 % 3.5 % 5 %

Lessons from chessboard trials

High intra-field variation– In ALL components of N Optimum

…including fertiliser recovery…and grain protein

…BUT yield tends to be correlated with SNS

Problems with Plot Trials– Concern about previous plot-based research

Potential value in precision farming... – Only way of assessing soil type effects

– Enables on-farm testing

Auto-N LINK project LK09134

New project using on-farm testing

Uses yield mapping to make tramline comparisons

HGCA Project 2160005

Summary

Potential to increase yield But this will require new approaches

High yields will require more N

Some variation may be consistent Expect big variation, within field, farm-to-

farm, and season to season

Errors in N-use are often undetected

On-farm monitoring will help… and so will collaboration!

Thank you

What’s in the back of your barn?

Shaun TaylorHead of Technical, Rank Hovis Ltd

What’s in the back of your barn?

A look back at recent challenges for farmers and millers

Costs of production and premiums

What millers mean by quality and how quality varies

Understanding what you have and preserving its value

Mapping quality

Using HACCP to control issues that may lower quality

Wheat and mill distribution

nabim - who are we?

• 30 member companies operating 51 mills – virtually all UK flour

milling industry

• Members range from the biggest companies to small stone mills

• 4.1 million tonnes of flour, from 5.1 million tonnes wheat

• Average flour production per mill = 81,000 tonnes/year

• Flour imports and exports are both usually small – 1-2% of total

production

UK Flour production (2012/13 est.)

Total flour production 5,121,000 tonnes

White breadmaking 49.4%

Brown breadmaking 1.9%

Wholemeal breadmaking 6.2%

Biscuit 10.9%

Cake 2.2%

Pre-packed household 2.7%

Food ingredients 3.6%

Starch & other 23.2%

Harvest 2012

Farmer issues:

• Excess rain

• Insufficient sunlight

• Low yields

• Higher claims

• Low specific weights

Miller issues:• Low specific weights

• Slow intake

• Increased cleaning

• Reduced milling capacity

• Poor flour colour, reduced

baking quality

• Increased wheatfeed

production

Harvest 2013

Farmer issues:

• Wet crop establishment

• Lack of some seed types

• Wet cold winter

• Cold until mid-June

• Very hot clear dry July

• Below average yields

Miller issues:

• Average quality in most respects

• Hard starch, difficult to damage

• Smallish crop

• More spring wheats

Milling wheat premiums

Average premium over period was approx.

£23/tonne

So, what is quality?

Quality?

What Do Millers Mean By Quality?

Consistency Performance in Application

Analytical Specification

FOOD SAFETY

Wheat Variety Selection

Growing/ Harvest Conditions & Management

Storage Conditions & Management

Our quality requirements – ‘headlines’

For bread-making (Group 1 varieties)

• Protein 13% (12.5% for medium quality)

• HFN 250 seconds

• Specific weight 76kg/hl

• Moisture - maximum normally 15%

• Performance in application and consistency

Our quality requirements – ‘headlines’

For biscuits (Group 3 varieties)

• Protein 10.7%

• HFN 180 seconds

• Specific weight 74kg/hl

• Rheology is important - lower resistance and extensible

• Performance in application and consistency

Elements influencing milling wheat quality

Element Analytical Specification

Performance in Application

Consistency Food Safety

Variety selection





Growing/Harvest Conditions & Management





Good store management

High quality bread specification(13% protein, HFN 250s, SpW 76kg/hl)

2013 2012

Medium quality bread specification(Protein 12.5%, HFN 180s, SpW 74.0kg/hl)

2013 2012

Biscuit wheat quality (Group 3)Protein >=10.7%, SpW >=74Kg/hl, HFN =180s

2013 2012

Protein distributions

Intake protein data from a large flour mill based on 7,080 samples for 2012 and 34,700 samples in 2013.

All other results samples were outside this range.

Mapping nitrogen

So, do you map quality?

If you can map crop mass and variable N applications, what next?

Yield can be mapped so why not sample (at harvest) to map quality?

Can quality data (for each field) be ‘built’ over the years?

Store sampling, Church Farm

Sample 1 Sample 2 Sample 3 Sample 4

Sample 5 Sample 6 Sample 7 Sample 8

Sample 9 Sample 10 Sample 11 Sample12

Field 4

Field 5

Field 8

Field 10

Field 9

Store sampling, Church Farm

15.2% 14.7% 14.7% 14.8%

15.1% 14.9% 15.0% 15.2%

15.5% 15.8% 15.5% 15.5%

14.2% 14.1% 14.0% 14.0%

14.2% 14.1% 14.2% 14.1%

13.6% 13.7% 14.0% 13.8%

79.5 81.2 80.8 80.9

80.8 80.8 81.3 80.7

81.1 80.9 80.9 80.7

Moisture Protein Specific weight

Store sampling, Other Farm

13.8%

(£3,500)

13.6%

(£3,500)

13.4%

(£3,500)

14.0%

(£3,500)

11.8%

(£2,300)

12.2%

(£2,600)

12.5%

(£3,000)

12.2%

(£2,800)

12.8%

(£3,300)

12.4%

(£2,900)

13.0%

(£3,500)

12.7%

(£3,200)

11.9%

(£2,400)

12.0%

(£2,500)

12.4%

(£2,900)

11.8%

(£2,300)

Average proteinacross store= 12.65%

Equivalent to £52,000 premium value

• 1,600 tonnes in store

• Sampled in 100 tonne lots

• Assumed premium of £35/tonne

Without mixing loss of premium would be £4,300

Protein levels in each lot with premium equivalent

HACCP (Hazard Analysis and Critical control Point)

A system which identifies, evaluates and controls hazards significant for food and feed safety.

Adopted by the food and feed industry as the most effective means of controlling food-borne safety issues.

Can be used at all stages of the supply chain from grower to final product use.

Helps meet market place demands and expectations for safe food.

HACCP in the mill

Applying HACCP on the farm

Identifying all food safety issues.

Minimising all factors that can impact on quality.

Optimising the harvest strategy.

Drying, storage and loading all have HACCP guides (see HGCA Grain storage guide).

Key points

Each year presents different challenges and opportunities for farmers and millers.

Optimising premiums is key to improving the economics of milling wheat.

Quality is about analytical specification, consistency, performance in application AND food safety.

It’s understanding what you have and preserving its value.

Can we apply soil mapping to mapping and managing grain quality?

HACCP is a tool to prevent intake rejections, and make the supply chain more acceptable to the consumer.

Thank you

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