Sluggish grain price continues

10 January 1997

Sluggish grain price continues

By Tim Relf

GRAIN prices have weakened further, bringing little comfort to farmers with full barns.

Trading activity is limited, with price falls tempting few farmers into the marketplace. By mid-week, feed wheat, for example, was back to about £90/t ex-farm.

Such sentiments have also been reflected in the "paper market". March wheat futures were down £1.45 this week to £95.70, according to BDF Commodities.

Currency movements continue to dominate, according to Dalgetys Robin Webb. And the strengthening £ – worth 2.65DM or $1.70 on Wednesday – raises the likelihood of another green £ revaluation. This could knock nearly £4 off the intervention price, reducing it to under £95/t.

Without any turnaround in currency markets, any firming of grain prices is unlikely, suggests Mr Webb.

And while wheat is still priced favourably compared with French samples, by May that advantage could be down to $3/t, making it uncompetitive on world markets.

Milling wheat, meanwhile, continues to command a premium of about £20/t over feed crops. With values likely to come under pressure as mills search for alternative supplies, farmers should consider selling now, according to Cargills Simon Lock.

Barley, valued early this week at over £91/t, remains the only commodity bucking the trend, with strong demand in Saudi Arabia.

But buoyant barley values have priced it out of some rations. And with proteins being expensive, feed wheat has benefited, according to Glencore Grains Peter Williams.

But the UK still needs to do plentiful feed wheat business abroad, if the surplus is to be cleared, he points out.

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