By FWi staff
THE cut in interest rates means that export values will have to fall for the UK to remain competitive. And as a result barley values have fallen £1.50/t this week.
The unexpected cut of a quarter-point to 5.25% by the Bank of England on Wednesday has boosted the value of Sterling – now worth over 3 German Marks.
This will put downward pressure on grain prices and export prices will have to fall, said economist Gerald Mason of the Home Grown Cereals Authority.
Any strength in the value of Sterling is bad for farmers – although its not been huge, he added.
Barley prices have fallen on the back of this announcement with ex farm September values now at £71/t.
November values have eased to £73/t while intervention values have dropped more than £2 to £77.49/t.
But a strong world market and demand from shippers looking to cover export business for October through to December could help to boost the market again.
Jonathan Hoyland of Banks Agriculture said that for every % Sterling goes up prices will have to come down by the same. But despite this he believes the market could recover.
Theres interest in exports – particularly the Middle East, said Mr Hoyland.
Ian Wallis of Cargills believes that any price movements will be as the result of changes in the value of Sterling. Otherwise prices should remain relatively static, he said.