Analyst insight: UK human and industrial demand to hit 20-year low

This morning, we released the second official UK cereal supply and demand estimates for 2025/26. From a very mixed harvest in 2025, to lacklustre demand for some key industries, we take a look at what this means for supply and demand this season.

Lacklustre H&I demand

The demand picture this season is a story of two halves. While animal feed demand for total cereals is expected to remain relatively stable compared with 2024/25, human and industrial demand (H&I) is projected to drop off further to a 20-year low.

Compared with November’s estimates, total cereal demand by the H&I sectors is expected to fall by 139 Kt to 9.17 Mt, which is 1.315 Mt lower than in 2024/25.

The big driver behind the decline is a drop in demand from the bioethanol sector and from the brewing malting and distilling (BMD) sector.

As has been well documented, Vivergo ceased operation in August last year due to the incredibly tough operating conditions for the bioethanol sector. Ensus, the UKs other large bioethanol plant, hasn’t started back up since its scheduled maintenance break in September.

It is assumed they will remain offline too for the remainder of the season, unless ongoing talks with government around support for the sector come to fruition.

Demand for cereals, in particular barley, by the BMD sector is very subdued. These latest estimates peg H&I barley usage at 1.584 Mt, down 84 Kt from the previous estimates and 214 Kt down on the year, to the lowest level since our digital records began in 1990/91.

The further downward revision is reflective of the actual usage data we have seen to date, which has fallen even more sharply than was originally anticipated.

The BMD sector is under significant pressure from the latest cost of living crisis impacting demand, along with changing consumer habits. There have also been reports of several distilleries being moth balled due to the current pressures.

This is not just a domestic issue either, globally the sector is struggling, which also adds a dampener to producing for the export market.

Stable animal feed demand

For animal feed, there has been a shift amongst categories and grains. Compound feed demand is lower than estimated in November on the back of sharper falls in pig feed and compound poultry feed production.

Cattle feed demand has remained strong, but with the current situation for the dairy herd, it is expected the growth in demand will turn into somewhat of a decline as we hit turn out time.

On a more positive note, integrated poultry units (IPU’s) are expected to have a larger than previously anticipated growth this season, with improved prospects for the broiler sector. NI animal feed demand is also expected to be buoyant this season. 

In terms of cereal splits, compared with previous forecasts, wheat and barley usage in feed are expected to be higher and maize lower. This is the case in NI too, where we have seen more wheat in rations so far this season at the expense of maize.

Slowing imports, but dwindling exports

Imports of both wheat and maize this season are expected to return back to more ‘typical levels’ from last seasons record highs. Wheat imports are estimated at 2.20 Mt, unchanged from the previous estimate, but down 28% on the year.

Despite the challenging harvest 2025 brought, the quality of this season milling wheat crop is very good, leading to levels of imported wheat in the grist returning to more typical levels.

For maize, imports are expected to fall further than November’s estimate by 114 Kt to 2.17 Mt, down 30% on the year. The loss of bioethanol demand this season combined with competitively priced domestic feed grains, has driven the drop in maize imports.

This balance sheet is the first of the season to project exports and closing stocks for wheat and barley. Wheat exports have been estimated at 170 Kt, which takes into account the pace of trade to date.

Again, for barley, exports have slowed and are expected to remain somewhat lacklustre, with full season exports pegged at 450 Kt, down 36% on the year.

Despite a drop in demand, a greater fall in supply leads to a tighter balance sheet

Looking at the total cereal balance sheet, the fall in total availability has outweighed the drop in domestic consumption, leading to a tighter cereals balance sheet.

Although, with exports expected to be steady, commercial end-season stocks for total cereals are expected to be just above average at 3.576 Mt.

For wheat ending stocks are initially pegged at 2.048 Mt, relatively in line with last season, while barley stocks are also expected to be similar to last season at 1.268 Mt.

It is going to be interesting to see how the rest of the season pans out – will there be further changes in animal feed or bioethanol demand?

Or could we see maize becoming more favourable in the latter part of the season, pushing wheat back out of rations? However, as it stands at the moment, it looks like the UK will be carrying into next season relatively average stock levels. 

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