By FWi staff
BARLEY values have started to come under pressure as the Pound continues to strengthen against the Euro.
Recent currency moves have been big, said economist Mark Buckingham of Banks Agriculture. The Euro has weakened, while both the US Dollar and Pound have strengthened.
As a result, intervention barley is trading at quite a discount to what it would have been before the new daily rate was introduced in January, said Mr Buckingham.
Intervention barley would have been £86.10/t under the old system, but now only stands at £85.05/t.
“And it will probably have fallen to about £84/t tomorrow,” he said. “Weve lost £1 on what we thought wed have.”
As yet these lower intervention prices havent filtered through to the domestic market.
The EU Commission has continued to take an aggressive stance on exports and this could hold up the free-market price.
Currency is not looking good, though, said Mr Buckingham. “A cut in interest rates is expected later this week, and this should weaken the Pound, although not by much.”
The Euro is not looking robust, he said, “and its difficult to see the Pound coming down. This seems to be its normal level.”
New-crop barley continues to trade at attractive levels, said Cargills Ian Wallis.
“And with current intervention stocks at the end of the current marketing year estimated to stand between 9 and 10 million tonnes, now may be a good time to take some cover by selling forward.”