UK wheat still competes with French as prices rise

By FWi Staff

UK cereal markets were higher once again this week, by as much as £3/t, according to Home-Grown Cereals Authority (HGCA) figures.

Despite this further increase, UK wheat remains price-competitive on EU export markets, with UK soft milling grades discounting French by around £4/t.

Ex-farm feed wheat is about £74-£76/t for spot delivery, while milling wheat has inched up to £94.20/t.

Prices have now improved by as much as 15% since harvest lows. This is partly due to a recovery from temporary oversupply conditions that often occur at harvest as farmers sell off-the-combine, explained an HGCA spokesman.

The continued rally is the result of recent improvements in world wheat values, combined with a further drop in the value of Sterling against other European currencies, said Ian Wallis of Cargill plc.

Sterling eased, mainly in response to growing expectations of another cut in UK interest rates following a further reduction in US rates at the end of last week.

Since the start of August, the value of November wheat futures has increased by almost £10/t, with domestic values receiving substantial support over the past few weeks due to higher world prices and weaker Sterling, explained Mr Wallis.

“This has encouraged many producers to sell, while others have decided to hold off for further gains.”

If Sterling continues to fall, it may provide further support for domestic grain values. “However, this must be tempered against the unpredictable and volatile nature of financial markets, and there is no guarantee that Sterling will weaken,” warned Mr Wallis.

“It is vital that producers take full advantage of any short-term rallies in the grain market as and when they occur, but only as part of a full-season strategy to achieve a good average price.”

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