Wheat prices rally as Sterling falls

By FWi staff

PROSPECTS of higher wheat quality in Europe this season and a fall in the value of Sterling boosted grain prices last week.

But many are questioning how sustainable this rise is with the new crop just weeks away.

Economist, Gerald Mason from the Home-Grown Cereals Authority said that prices have fallen back slightly in the week, reflecting that harvest is closer.

Although Sterling has remained stable this week, stronger French values have helped UK prices in the past couple of days.

Ex-farm quotes for feed wheat are between £70 and £75/t, with milling wheat premiums ranging from £11-£14 at about £81/t.

Futures have eased slightly, with September wheat now at £76/t and November at £78.15/t.

The quality looks good so far, and the current weather is helping, said Mr Mason. “But bad weather could make all the difference in the next couple of weeks.”

Ian Wallis of Cargills also questioned whether the rally was sustainable.

Huge crops across Europe and the prospect of another are expected to put pressure on values as new-crop grains become increasingly available, said Mr Wallis.

He believes the two most influential factors on the domestic market this season will be the eventual size and quality of the French crop, and the value of Sterling.

“The key to prices in the short term is whether French producers and co-operatives sell grain into the spot market.”

If the French put a large proportion of their harvest on the open market, the UK would have to adjust domestic values to stay competitive.

However, there have been no quality problems voiced in France so far, and the area of bread-making varieties is said to have increased to 73% this season.

This could possibly mean that a higher proportion of the French crop would go for intervention, taking some pressure off UK prices.