Wheat slips back but not enough to compete

By FWi staff

UK wheat prices have fallen over £1/t this week on the back of falling export prices.

This drop was caused as UK grain attempted to regain some of its competitiveness against the French.

But UK wheat still remains uncompetitive with French grains and, as a result, fresh export business remains slim, said Ian Wallis of Cargill plc. “However, the UK has made a good start to the export campaign in the first six months of the season, exporting 1.6 million tonnes to the end of December.”

The reason that we are so uncompetitive against the French is that UK wheat only reflects a discount to the French of £2/t; this needs to be £3-£5/t, said a spokesman for Banks Agriculture.

“UK prices have slipped back this week on the back of lower prices in France, leaving the competitive position unchanged,” he said.

Immediate prospects look little better as world wheat prices slipped £3/t over the week, and consumers have sourced all they need before the Christmas holidays. They are expected to keep out of the market until values become pressurised again, said a spokesman from the Home-Grown Cereals Authority.

Milling wheat slipped back to £91.64/t this week, while feed wheat also eased, falling nearly £2 to £75.11/t.

UK interest rates were cut by a further 0.5% on Thursday, taking them to 6.25%. But Sterling remained almost unchanged, mainly as a result of the unexpected cut in EU rates last week, noted the HGCA.

The UK rate cut does little more than maintain the UK interest rate premium over EU rates, said a spokesman from the HGCA.

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