By FWi Staff

THE dramatic drop in value of Sterling last week triggered a substantial rise in the value of feed wheat.

However, the UK continues to be competitive on exports despite this price increase in domestic markets due to drop in currency. Spot values of feed wheat are currently £72-£75/t, while November futures also rose last week, climbing £3.80 to £77.15. Milling wheat also saw a substantial rise, climbing by £4 up to £91/t for spot movements.

“This is no blip,” said a spokesperson from Glencore Grain. “We have maintained for some time that £70 ex-farm is the floor of the market, and now go further and say we have seen the last of £70/t ex-farm wheat for the foreseeable future.”

Caution must, however, be exercised, warns the Home-Grown Cereals Authority. If domestic prices rise too far, UK wheat can become uncompetitive on export markets, even with the weaker Pound we have seen. Similarly, the increase in world prices seen last week, up $10/t to $110/t, has some way to go before it does more than reduce the export refund needed to ship EU wheat on to world markets.

Towards the end of last week, the Commission announced that it had granted export subsidy on a total of over 1.1 million tonnes of wheat and barley. This, added to the 700,000 tonnes granted last week, is a sizeable increase on 1997. The total tonnage granted in the whole of October last year was 1.4 million tonnes.

The USDA announced a lower global wheat production estimate of 590.62 million tonnes on Friday. This compares to their September estimate of 596.20 million tonnes. Contributing factors to this are the flooding in China, bad harvests in Russia and the lower projected harvest in Australia due to frost damage, said Gary Sharkey of BDR Agriculture.