Strong Pound floors barley sales
Wednesday, 22 October, 1997
TRADE is quiet this week, and many farmers with in-store barley are biding their time rather than selling. Current price movements reflect currency fluctuations, rather than changes in supply and demand.
A week ago, ex-farm barley for October delivery was trading at £78/ t for feed barley and £96/ t for malting. The strength of Sterling, which surged again yesterday (Tuesday, 21 October) to close at DM2.92, resulted in prices falling. Growers will be lucky to receive £75/ t for feed crops, say traders.
The MAFF harvest estimate of 7.85 million tonnes had given hope of high export availability this year. But exporters of malting barley – who were looking forward to a restitution payment of Ecu18/ t – now find their expected margins eroded. The Pound is now worth 48 pfennigs more than this time last year.
Traders say feed barley exports are struggling and the threat of continental malting barley imports is increasing as Sterling continues to climb.
The situation is hindered by the apparent reluctance of UK maltsters to buy British, according to Ivan Bishop of Allied Grain, Norfolk. Many farmers are disappointed that some buyers have already turned to barley imports from abroad, he adds.
But the market is always in a state of flux at this time of year, says Trevor Wright, director of Simpsons Maltsters, Berwick-upon-Tweed. A quiet time can probably be expected for anything from two weeks to two months. Farmers with in-store barley will sell at a premium only by finding buyers willing to pay higher prices in return for quick delivery.
The intervention price for November, £84/ t, appears to be an attractive alternative because market prices are low, according to information from the Home Grown Cereals Authority.
For some growers, selling into intervention represents the only hope of seeing a decent return, says Peter Harman of the Southern Counties Agricultural Trading Society, Winchester.
But the quality and moisture content of this years crop could mean that some barley will fail to reach intervention standards, warns David Doughty, managing director of BDR, Lincs. When the cost of cleaning and drying is added into the equation, intervention may be uneconomic, he says.
“Really, were in a wait-and-see situation until we get some sign of where Sterling is heading,” adds Mr Doughty.