Wheat market quiet in pre-Christmas slowdown

By FWi staff

THE UK wheat market has seen the traditional Christmas slowdown for the last month, with plenty of deliveries but not much new business.

Prices for the New Year are uncertain, said a spokesman from Banks Agriculture. He believes that the worst of the prices have been seen, but finds it difficult to see where a sustained price rise could come from.

UK wheat continues to be uncompetitive for export compared with the French and, unless there is a rally on the French market, domestic supplies are expected to come under pressure in the New Year, said Ian Wallis of Cargill plc.

But a rally in French values is unlikely as more French wheat than first thought is not of intervention standard, and the French do not have storage capacity for their entire surplus.

Sterling has remained relatively stable despite recent attempts to rise against the Deutchmark. It had however, inched up to DM2.81 at the start of the week. Typical ex-farm values for feed varieties are about £76/t for movement in January and up to £80/t for delivery in May.

The introduction of the Euro on 4 January and the impact it has on Sterling will be interesting to watch. A strong Euro could see the Pound fall and give a much-needed boost to UK export competitiveness, but a weak Euro would see the Pound remain at todays levels or similar.

While there are arguments both for and against the UK signing up to a single monetary union, it would appear that we are probably out until at least the next election, said a spokesman from Gleadell Banks.

Those who grew milling wheat this year did better than in 1997, with spot values peaking at about £115/t during June and July. This was a premium almost £40 over feed wheat, noted Mr Wallis: “But the lows followed soon after as harvest pressure reduced prices to about £80/t – a premium of only about £12/t, he said.”

Ex-farm spot prices for milling wheat remain relatively unchanged at about £91.75/t.