Sterlings fall and high quality boost wheat price
By FWi Staff
EX-FARM prices for wheat moved up by about £1/t this week following improved values on the London futures market.
This rally was predominantly the result of a fall in the value of Sterling, although the market continues to receive good support on a local level from trade buyers looking to cover immediate requirements, said Ian Wallis of Cargill plc.
Trader Gary Sharkey of BDR Agriculture put the recent price rise down to the good quality harvest seen up North. “Over the past few weeks the industry has been awaiting to see what the quality up North would be. Recent results have been much better than anticipated and spring Chablis results have been excellent with hagburgs of 350,” said Mr Sharkey.”
Sterlings fall against the Deutschmark saw a 10-month low on Friday, when it fell to just above DM2.83, creating the possibility of a green rate devaluation. For this to happen, it is estimated that trading would need to remain at an average of below DM2.84 over a 10-day period.
This looked unlikely when the Pound recovered to DM2.85 on Tuesday, but it fell back again on Wednesday, to DM 2.83.
Earlier in the week, the Home-Grown Cereals Authority released its second interim results from the 1998 harvest, confirming the improved quality of this years crop compared with 1997. Bushel weights and hagburgs are just below the five-year average, while protein values are slightly above.
The EU granted 186,500 tonnes of wheat export licences towards the end of last week at a rebate of Ecu38.45 (£26.03). This maintains the strategy followed so far this year, and keeps EU wheat values at parity with US soft red winter wheat, said Mr Wallis of Cargill.
Last month saw a dramatic improvement in exports compared with 1997. Over 500,000 tonnes of wheat have been exported from the UK, with 70,000 tonnes of this going to Bangladesh. “This has resulted in a real shortage of feed wheat in Lincolnshire and Yorkshire, creating strong demand,” said BDRs Gary Sharkey. “However, it is anticipated that 70-80% of requirements are covered for October deliveries, so demand will ease towards the end of September.”