UK & EU: UK’s barley and wheat trade with EU countries stalls in early 2021

The UK's barley and wheat trade with EU countries stalled significantly in early 2021, as both buyers and sellers adjusted to the new post-Brexit trading environment, Argus Media reported on March 17.

The slowdown came despite a tariff-free trade agreement being reached between both markets in December, and despite supply and demand fundamentals pointing to a stronger import/export pace for both crops in January.

Barley shipments — the UK's main grain export — totalled just 40,000t in January, which was the lowest volume the UK had exported over any month during the continuing 2020/21 marketing year to 30 June, and compared with an average export pace of 232,000 t/month over the fourth quarter of 2020.

The January slump came despite exporters actively seeking new destinations to offload their record barley surplus, with domestic supply reaching its highest levels in 40 years at around 8.36 mln tonnes, data from the UK's Department of Agriculture and Rural Affairs show.

But arbitrage opportunities to EU destinations meant virtually the entirety of the UK's barley exports continued to flow to the EU in January, and the slowdown in total volumes was likely to be a result of deliveries being held up by new post-Brexit trade procedures with the EU.

Wheat imports to the UK also slowed in January, despite domestic supplies turning out at record lows, following unfavourable weather during key crop development periods.

Only 99,000 tonnes of wheat arrived at UK ports in January, compared with an average of 221,000 tonnes in the preceding three months.

Wheat cargoes arriving from non-EU countries made up around 27pc of the UK's January deliveries, up from an average of just 15pc during the previous three months, with buyers appearing to expand their supply chains to mitigate disruptions in procurements from traditional EU buyers.

But despite the January slowdown, the UK's National Farming Union — which had correctly anticipated logistical issues affecting the country's agricultural trade during the early part of 2021 — expects shipments to have returned to around normal levels beyond January, as market participants better familiarise themselves with the new post-Brexit procedures.

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