Stronger Pound and rejected bids hit cereal prices

By FWi Staff

UK cereal markets fell by around £2/t over the week.

The drop was mainly due to the slight firming of the Pound, combined with the rejection of all bids for wheat and barley export licenses at the restitution tender, said Ian Wallis Cargill Plc.

Sterling climbed to DM2.80 mid-week, up DM2.75 from the week before. Demand from domestic consumers was subdued compared with recent weeks, and both these factors pressured prices lower, stressed a spokesman from the Home-Grown Cereals Authority.

Speculation that German interest rates might be cut also helped sterling climb. However, towards the end of the week Sterling eased back to rest at DM2.77 when these rumours failed to materialise.

Ex-farm bread making wheat prices eased at £91.40/t while other milling wheats inched up £2.50 to £81.30/t. Feed wheat prices are at £75.80/t.

“World values also fell last week as the expected announcement of a 3 million tonne food-aid package to Russia failed to materialise,” said Mr Wallis.

“While Russia may yet receive food-aid, it seems that earlier suggestions that this would provide ongoing support for world values may be a little optimistic.”

The EU Commission refused to grant free-market export licenses for wheat and barley this week. This was due to the range of bids being more expensive than in recent weeks, said a spokesperson at the Home-Grown Cereals Authority.

Recent reports have also suggested that shippers have taken out more licenses than sales. “Something the Commission would want to avoid.”

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