Current situation regarding UK’s RED II recognition: Grain market daily

• UK feed wheat futures (May-25) closed at £191.25/t yesterday, falling £0.95/t from Monday’s close. The Nov-25 contract lost £1.35/t over the same period, to close at £192.50/t.
• Global wheat markets fell yesterday following continued competition from Argentinian and Russian wheat exports, which are pricing as the cheapest in the export market (Reuters). However, the market was partially supported by SovEcon cutting its 2025 Russian wheat forecast by 2.9 Mt to 78.7 Mt due to poor crop conditions.
• Paris rapeseed futures (May-25) closed at €518.50/t yesterday, falling €6.00/t from Monday’s close. The Aug-25 contract lost €4.75/t over the same period, to close at €469.00/t.
• Weakness in palm oil due to sluggish demand from key destination markets weighed on the European rapeseed market. Also, oilseed markets were pressured as Chicago soyabean futures closed at all-time lows yesterday in response to favourable conditions in Brazil and reduced Chinese purchasing of US soyabeans.
• Agreste (France’s farm ministry) released forecasts for winter crop areas for 2025 harvest yesterday. It pegged the winter soft wheat area at 4.5 Mha (+8.7% YoY), winter barley area at 1.23 Mha (-0.8% YoY), and winter rapeseed area 1.34 Mha (+0.6% YoY).

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Earlier this year, with substantial support from Red Tractor, SQC, and AIC, UK growers were able to continue supplying UK-grown grains (e.g. wheat) as a biofuel feedstock under the Renewable Energy Directive (RED) II.

The objective of RED II is to support and accelerate the EU’s clean energy transition. RED II requires the EU to fulfil at least 42.5% of its total energy needs with renewable energy by 2030, with an aim of 45%; of which biofuels can account for.

While 2024 was a year of lower domestic wheat production, the two main bioethanol plants (Ensus and Vivergo), remain key demand centres of UK-grown wheat as they have been able to supply RED II compliant biofuel to the EU.

However, there have been ongoing issues which stakeholders have been managing as to ensure the continuity of UK-grown grain to be compliant as a biofuel feedstock for RED II:

• For grain from harvest 2024 (and onwards) to be used as a biofuel feedstock, it needs to have a newly approved NUTS 2 value. The Department of Transport submitted recalculated values in May, however the UK is still awaiting confirmation of acceptance regarding the recognition of reclassified UK NUTS 2 values from the European Commission. Evidence shared by EU Member States has suggested that they are being prioritised ahead of the UK, which is contributing to the delay.
• Voluntary schemes and stakeholders have been liaising with the European Commission on the roll out of its Union Database for Biofuels (UDB). There have been ongoing challenges with the rollout of the interface designed for merchants and the biofuels refineries, with some suggesting the current format exceeds the mandate within the recast RED II. In response to feedback from stakeholders, the previous deadline of November 2024 was, and continues to be, delayed until further notice.
• Following the UK’s exit from the European Union, within the supporting regulations around Article 11(1), the European Commission does not recognise UKAS as a national accreditation body, as the subtext establishes that this should be in an EU Member State. Currently a solution on this needs to be in place by January 2025. However, there is some anticipation this will be postponed to January 2027.

Recently, the smaller availability of UK-grown wheat has encouraged greater use of imported wheat, while the relative competitiveness of global maize prices supports the opportunity to use maize too.

Currently, stakeholders are awaiting clarity from the European Commission regarding the recognition of the reclassified UK NUTS 2 values, as well as UBD and recognition of UKAS.  

For more information regarding the UK’s RED II recognition and its impact on the domestic market, please click here.

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