By FWi staff
CEREAL prices failed to gain any further support from Thursdays interest rate cut, noted the Home-Grown Cereals Authority.
UK interest rates were reduced by 0.5%, to 6.75%. This was a larger reduction than many had expected, but still failed to have any effect on the Pound.
General opinion among currency traders is that the larger cut in interest rates makes any further reductions before the end of the year unlikely, said Ian Wallis of Cargill Plc. “As such, Sterling is likely to remain relatively stable in the short term.”
However, key prices such as £80/t ex-farm have been reached for feed wheat post-Christmas, and this has kept sellers active, said a spokesman from Banks Agriculture.
“At least 80% of the trade has been for pre- Christmas delivery, with consumers keeping up strong demand pressure,” he said.
Speculation in the trade has started to centre on how much wheat has been sold or committed off-farm. Industry insiders estimate that as much as 50-70% has been sold. “If 50% is unsold, then the export pace needs to remain brisk for the rest of the year,” said one trader.
The major announcement of the week was verification by the US Department of Agriculture of a food-aid package to Russia. The USDA secretary, Dan Glickman, said that more than 3 million tonnes of farm commodities would be donated, including a wheat offering of 1.5 million tonnes.
“The total package is estimated to be worth around $500 million, but is dependent on Russia satisfying several criteria laid down by the United States,” said Mr Wallis.
In return, the USA will provide long-term, low-interest loans to the Russian Government, who will buy food for their country.
Wheat values ended the week almost unchanged as Sterling held on at DM2.76. UK bread-making wheat inched up to £94.80/t, while other milling wheat nudged up to £82.60/t. Feed and other wheat climbed about £2.40 in some areas, to end at £77/t.
However, strong interest has been shown for the 1999 crop this week as wet weather continues to hamper plantings. Prices of £80 ex-farm for the September period has been paid in some areas, an improvement of £15/t on values seen this year.