Sterling surge means gloom for cereals
CEREAL industry strategists are convinced restructuring must be carried out in the light of the surge in the value of Sterling to almost DM3.1 to the Pound.
Their gloomy outlook is based on the assumption that Sterling could hold its high position against other European Union (EU) currencies for some time.
The impact of this on trading conditions could coincide with what is likely to be a record crop in 1998-99.
A large crop could cause problems, with 1.2 million tonnes of barley already carried over in intervention, coupled with a rise in the wheat export surplus – wheat over and above domestic market consumption – to five million tonnes.
This would create a situation in which standard-quality feed wheat would have to average around £70/ t ex-farm to remain competitive with other EU countries grain.
The Home Grown Cereals Authority (HGCA) predicts that the UK will have to sell another 1.5m tonnes more than last year (a rise of 10%), with the likelihood that prices will be lower.
Stephen Thornhill, the director of HGCA, said some people would feel “horribly trapped” because there were no credible alternatives for them. All livestock sectors, including dairying, faced equally dispiriting crises, he said.
The International Grains Council published revised estimates for world wheat production for 1997-98 up 26m tonnes on the previous year to a record 608m tonnes.
- The Scotsman 03/04/98 page 28