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Dramatic Changes Ahead For The UK Grain Sector Says Leading Grain Trader

Announcing the Gleadell Agriculture harvest 2009 wheat pool results,
David Sheppard, managing director of Gleadell Agriculture, foresees a
dramatic change in the structure of UK grain getting under way in the
next 18 months.

The advent of up to three wheat-based ethanol plants will create new
grain demand, whilst feed compounding continues to reduce in volume,
and a major starch plant is closing imminently, says Mr Sheppard.
The ethanol plants will also produce a sizeable tonnage of DDGs (dry
distillers grains) which will present opportunities for the livestock
sector, competition for other feed ingredients, and a marketing
challenge for those involved in trading these products. All of this
will result in changed dynamics for the UK wheat market, with a lower
exportable surplus in the north, and a larger surplus south of The
Wash. We may well see a rise in grain movement within the UK by
vessel, from south to north, and Scotland may look to Danish or
Scandinavian wheat as much as English to meet their requirements.

This changing market will further underline the importance of having
access to first-class world market information. Volatility is here to
stay and our latest pool results reinforce the position of the Gleadell
Grain Pool as the best-performing national grain pool for UK farmers
and an increasingly popular low cost, hands-free option for farmers
with better things to do than constantly monitor grain markets.

To put our pool results in context, the run up to the 2009 harvest
was similar to the period June-August 2008 when prices fell from well
over 150 per tonne to sub 100. We saw a similar fall this season
between June and September with feed wheat below 80 in some regions.
The reasons behind this fall are that the world has produced the
second-largest wheat crop ever and has rebuilt stocks to the highest
level since 2000/2001. Also European crops both inside the EU, and in
eastern Europe, have exceeded expectations and there is a large
carryover stock level throughout the EU – particularly in the UK
that has weighed heavily on the market. The fall in prices came
despite the UK producing approximately 3 million tonnes less than in
2008 and clearly demonstrates, yet again, that the world market is the
key driver for our market and those who base their market view solely
on UK data will get it wrong.

We were well-informed as to crop performance, particularly in eastern
Europe and in France and Germany, and ensured that we had sold 100% of
our harvest and October/December pools as the UK harvest began. UK
crop quality is better than in 2008 and mycotoxins are not a
significant issue, but in exporting our surplus we face competition
from the Black Sea, the Baltic countries and other EU regions. Our
exportable surplus is between 2 and 2.5 million tonnes and, to date,
exports are proving difficult despite a weaker .

For some, the future will seem daunting and laden with risk, but we
see lots of opportunities ahead, and we will be aiming to increase and
improve the service we offer to farmers and users of grain in the
years to come, concluded Mr Sheppard.

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