STERLING must weaken if this years exportable wheat surplus is to be cleared, a major UK grain trader warned this week.
The domestic market is virtually covered and the Pounds strength is crucial in winning export orders, said Robert Kerr of Glencore Grain.
“The only way we can get rid of the surplus now is by export,” he said. “Its got to go on a boat and if the Pound goes up, our competitiveness will obviously go down.”
Exports to the end of this month are predicted to reach 2.65 million tonnes, leaving a surplus balance of up to 800,000 million tonnes that needs to be shifted, Mr Kerr believes.
EU demand is largely satisfied and much of the surplus will have to go to third countries. Although Brussels granted export licenses for 214,000 tonnes last week, there is still much to be done before the end of the season.
On the domestic market, ex-farm bread wheat is trading at £101/ tonne. Other milling wheat is fetching £80/ tonne and feed wheat is selling for £74/ tonne.
Futures prices gained up to 30p this morning as the Pound opened five pfennigs down against the German Mark at DM2.992.
Old-crop contracts are worth £78.80/ tonne (May). New-crop wheat is worth £80.75/ tonne (July) and £80.00/ tonne (November).