Analyst Insight: Marketing and planning for a hard Brexit

Thursday, 22 August 2019

Market Commentary

Saudi Arabia has issued a tender for 780Kt of feed barley for October-December delivery.

UK feed barley is currently competitive into Saudi Arabia with UK FOB values quoted at £136.50/t for October.

French FOB values are currently around £143.00/t with similar freight rates of £25.00/t. UK feed barley could price around £161.50/t CIF to Saudi Arabia, this is also competitive against Ukraine, with indicative CIF prices of £168.00/t.

With export sales beyond October minimal, gaining part of the Saudi Arabia tender would provide much needed demand. However, the UK would need to meet Saudi specifications including a 14% moisture requirement.  

Click here for the latest UK merchants, ports and co-ops cereal stocks data.

Peter Collier

Arable Analyst

Marketing and planning for a hard Brexit

With harvest well underway, and indications of a large surplus of cereals, both domestically and globally, exports and trade are of increased importance in 2019/20. Yet Brexit, and the nature of the UK’s departure from the EU, risks complicating and disrupting normal trade flows.

Over the next couple months we will discuss in detail the individual aspects of a hard Brexit and their impact on UK markets in 2019/20.

Additionally, many planting decisions will have been made, or are potentially underway. The strong possibility that the UK will leave the EU without a deal has led to an added complication for planting the 2020/21 crop.

Brexit Analyst Insight articles

No Deal Arable Tariffs 


Feed and medium quality

  • €12/t tariff on the first 129Kt erga omnes (available for all countries) that the UK could access.
  • A further TRQ open to all origins (excluding the US) with a volume of 2.372Mt is available at €12/t, beyond the erga omnes TRQ.
  • Beyond, and out of the two tier TRQ allocation system, a €95/t tariff would apply when exporting to the EU.

Milling

  • €0/t tariff on high quality milling wheat, meeting 230HFN and 14.6% protein.
  • While there is a zero tariff on export of high quality wheat into the EU, the UK is unlikely to have a domestic surplus of 14.6% protein milling wheat.  

Feed

  • €16/t tariff on the first 307Kt of feed barley exported into the EU would be applied in a hard Brexit.
  • The tariff rises to €93/t on all subsequent exports once the EU has imported a total of 307Kt.

Malting

  • The full €93/t tariff is applied to all barley exports to the EU that are for malt (other than a small 20k allowance for specific use at €8/t).
  • €0/t tariff on oilseed rape exports to the EU.
  • €0/t tariff applied to oilseed rape meal exports to the EU.
  • Tariffs on rapeseed oil range from 3.2% to 9.6%, depending upon the end purpose, with oil for human consumption at the higher tariff rates.
  • A flat €89/t tariff on all oat exports to the EU would be applied, with no lower rate TRQ available.

Upcoming

  • Barley Trade Analysis - 29 Aug
    • What might need to change for 2019/20? What is the barley market outlook?
  • Wheat Trade Analysis - 5 Sep
    • The UK wheat trade is set for change. Covering wheat tariffs and TRQ's, what are the likely implications for the domestic market?
  • Barley Export Price Matrix - 12 Sep
    • With a greater need to compete into markets outside the EU, freight rates and black sea competition will dictate domestic markets.
  • Wheat  Export Price Matrix - 19 Sep
    • Tariffs vs Freight, what will dictate the export destinations for UK wheat?
  • Oats & Malting Barley 26 Sep
    • Tariff barriers into the EU may prohibit market access, where next for exports and the domestic surplus?

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