17 January 1996

Export surplus leaves

grain in the doldrums

GRAIN markets are still in the doldrums, with prices dragged down by a big export surplus on the Continent, limited international demand and adverse movements in sterling.

The first issue of export subsidies by Brussels this year was disappointing, suggesting the commission will continue its relaxed approach to world sales, allowing some rebuilding of intervention stocks as the season progresses.

Farmers are reluctant to let anything go for less than £90/t, says William Fox of Continental Grain, preferring to delay sales.

Whether things will look any better then is debatable. French wheat prices are gradually drifting lower, while the major co-ops predict a big carry-over into the new season. And next Tuesdays green £ revaluation could knock as much as £8/t off the UKs theoretical support level, depending on currency movements before then.

The only good news for arable farmers emanates from across the Atlantic. Monthly figures from the US Department of Agriculture revealed a surprising 7% drop in the winter wheat area for 1997 harvest, giving a slight fillip to new crop values, currently quoted at £90-£92/t for November, says Nick Oakhill of Usborne Grain.

And for oilseeds, the USDA has revised down its end-season stock estimate for soybeans to a new 30-year low. This has helped lift UK oilseed rape prices £5 to £171/t this week. But growers are being warned to expect a 2% to 5% cut in area aid payments when balancing cheques go out in April.n