Wheat soars as Pound sinks
By FWi Staff
SPOT prices for wheat soared this week following the sharp drop in the value of Sterling. The value of the Pound now stands at DM2.73660 and $1.69660.
Feed wheat values have risen by over £2/t this week, putting ex-farm prices above £70/t. However, the improved prices stimulated increased farmer selling, putting some marginal supply pressure on the market which tempered the rally, said Ian Wallis of Cargill Plc.
Further pressure has been put on Sterling by a weaker Dollar , which follows continuing global economic uncertainty and a reduction in US interest rates.
The sudden increase in prices seen this week has been the result of the drop in value of Sterling rather than the devaluation in the Green Pound, said Gerald Mason of the Home-Grown Cereals Authority.
“Consumers have been getting nervous as prices stayed low for such a long time but with the increase in world prices of over $10/t seen in the last couple of days we are looking towards a recovery. This has been reflected by the enormous volumes traded on the LIFFE futures market yesterday (Wednesday),” said Mr Mason.
More than 2300 contracts were traded yesterday, which is more than usually traded in a whole week. LIFFE wheat closed up £1.60 to £1.80, with the November 1999 contract up just 50p/t. “This fall in Sterling makes the UK more competitive to export to EU destinations,” said Mr Mason.
“However, it is important that the domestic market price does not rise too much in order to keep us competitive.”