by Whitney McFerron and Megan Durisin
The U.S. is about to import the largest wheat cargo from the U.K. in more than two decades as a combination of ample British supply, a weaker pound and rock-bottom freight rates make the unusual trade viable.
Related: Weekly Wheat Review
The bulk carrier Sbi Lambada is scheduled to depart from Bristol and arrive May 22 in Wilmington, North Carolina, with about 61,000 metric tons of the grain, according to data from the North Carolina State Ports Authority. Farmer-owned cooperative Openfield is shipping the cargo, according to David Doyle, head of wheat trading.
It’s unusual for the U.S. to import large quantities of wheat, not least because it’s the third-biggest exporter, behind only Russia and Canada. The U.K., a far smaller producer, primarily exports feed-grade wheat to other European nations. Never before has it shipped a cargo that large to America, according to customs records dating to 1992.
British export sales accelerated in recent months as two years of bumper harvests pushed prices near a six-year low, while a weaker pound boosted the appeal of its supplies. Its grain has become a competitive alternative for livestock producers after corn prices rallied, said Jack Watts, an analyst at the Agriculture & Horticulture Development Board.
“U.K. feed wheat should be fairly competitive on the global scene,” Watts said by phone Monday from Kenilworth, England. “This is largely being driven by the strength of the corn price relative to the wheat price.”
Feed-wheat futures lost 7.1 percent this year in London and fell below 100 pounds ($144) a ton in March, the lowest since 2010. Big harvests mean the U.K.’s wheat surplus this year will be 38 percent larger than in 2015, according to government estimates. French corn prices are up 12 percent this year in Paris as dryness in Brazil threatened to reduce supplies in the world’s second-biggest exporter.
Even though the U.S. is a net exporter of wheat, local variations in availability and freight costs sometimes lead to foreign purchases. And when there are imports, they’re most likely to come from Canada, which shares a 5,500-mile border and free-trade status. North Carolina is one of the biggest U.S. producers of turkey and pork, so it needs significant volumes of feed grain.
The U.S. is expected to import 3.27 million tons of wheat in the season that ends May 31, a four-year low, according to the U.S. Department of Agriculture.
The shipment heading to Wilmington is more than the 26,000 tons of wheat that was exported from the U.K. to the U.S. in the entire 2014-15 season, according to customs data available on the AHDB’s website. So far this year, the biggest importers of U.K. wheat have been Spain, the Netherlands, Portugal and Ireland.
--With assistance from Isis Almeida.
To contact the reporters on this story:
Whitney McFerron in London at [email protected]
Megan Durisin in Chicago at [email protected]
To contact the editors responsible for this story:
Simon Casey at [email protected]
Lynn Thomasson at [email protected]
Millie Munshi, Anne Riley
© 2016 Bloomberg L.P