Wheat edges up despite strong Pound

By FWi staff

UK OLD-CROP wheat values inched higher last week despite the strengthening of the Pound.

During the week Sterling reached a record high against the Euro since its launch in January this year.

A lack of demand from UK millers and the release of the MAFF December census results were the two major factors to affect the market over the week.

The figures released show that the total area of arable crops the in ground on 1 December was 14% lower than in 1997. Winter wheat was down 12% while winter barley was reduced by 26%.

Reasons for the fall in crop area are the increase in set-aside rate from 5 to 10% and the very wet weather, said one trader.

Ex farm spot prices crept up to £72/t over the week, while milling wheat values eased slightly at £84/t.

Futures markets gained for a second week running, with March contracts up at £73.40/t, and May futures climbed over £1 to £75.60/t.

In the old-crop market, some merchants and shippers may be short, anticipating lack of demand and further weak prices, said a spokesman from Banks Agriculture.

“However, last weeks rally has caused farmer sellers to hesitate this week and this has created tight supply and a lift in the market,” he said.

A spokesman from Glencore grain said that main reason behind these firmer values was the situation in France.

French intervention offers jumped by 500,000 tonnes to 3.7 million – this is awaiting acceptance and could be rejected for quality or storage reasons, but for the moment is “off” the market, he said.

But despite a steady market in the UK, grain values remained weak in Europe following news that Egypt has chosen American and Australian wheat over European.

Prices fell on the back of this, as it had been hoped that at least some of this wheat would be of European origin, said Cargills Ian Wallis.

But despite these slightly firmer prices, the situation is not likely to change dramatically.

Large stocks and limited demand are keeping domestic prices in check, said Mr Wallis.