By Johann Tasker
A COMBINATION of sunny weather and a weaker Pound has split the UK grain market in two. As a result, old-crop and new-crop values are now moving in opposite directions.
The price of this seasons grain is being boosted by a drop in the value of Sterling. But grain futures are under pressure from expectations that this summers harvest will yield a bumper crop.
Over the past month, Sterling has fallen substantially from its recent ten-year high of DM3.10 against the Deustchmark. The Pound is currently trading at DM2.87 – its lowest level for almost seven months.
Old-crop bread-wheat values have soared by more than £10 to about £112/ tonne ex-farm as foreign wheat has become less competitive in price. Regular wheat supplies have also benefited, although by a lesser amount. Feed wheat is now selling for £70-77/ tonne, depending on region.
Prices over the coming weeks could improve further if the Pound continues to slide. But expectations of a bumper wheat harvest this summer and no forecast increase in domestic demand have so far limited gains.
Growers hoping for higher barley prices next season are likely to remain disappointed, according to Gerald Mason of the Home-Grown Cereals Authority. And any recovery in new-crop wheat prices look limited given the likelihood of another large crop this harvest.
A new grower-funded organisation has been set up to try and export more grain from what is already in danger of becoming an vastly over-supplied domestic market. Officials at British Cereal Products – which will take over from the HGCAs Food from Britain committee – aim to ship abroad more than 3.5 million tonnes of UK grain within the next three years.
The target represents a forecast increase in grain exports of almost 10% on 1997. If successful, it will push total grain exports to 9m tonnes, about 40% of total UK output.
But the BCP will have to sell aggressively on a bearish global market if it is to be successful. The world is already over-supplied with coarse grains and European Union intervention stores are bulging. Falling prices this season encouraged growers to submit more than 1.25m tonnes of barley into UK government stores and next season could see more of the same.