Sterling strength hammers UK grain markets

Wednesday, 14 January, 1998

By FWi staff

TRADERS reported a “deathly calm” on the UK grain market today, after a sudden jump in the strength of Sterling.

The Pound climbed more than 3 pfennigs yesterday to DM2.974. And by mid-day today, all ex-farm cereal prices had dropped by about £1/ tonne in response.

Feed wheat now selling for £75/ tonne.

“The situation is really testing the staying power of farmers trying to decide whether to hang on and wait or accept the market price,” says Paul Toseland of Viking Cereals.

A shortage of high-quality bread wheat has seen milling premiums climb to £26/ tonne over the feed price. But although some top-quality milling wheat is being sold, merchants report slack demand for Class Two varieties.

The strong Pound continues to mean imported milling wheat is more favourably priced than domestic supplies, say millers. France and Germany continue to be the main overseas sources, with few orders going the way of UK farmers.

Trade in feed barley is “desperate”, one trader told FWi. An open-market price of less than £69/ tonne has pushed up intervention offers to almost 180,000 tonnes, according to the Intervention Board today.

LIFFE futures have also quietened. Wheat contacts for March were trading unchanged at £83.00/ tonne. Barley for January next year climbed 25p to £82.50/ tonne.

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