Uncertainty, as currency is moved up and down by political uncertainty over Brexit, is leading to a quiet UK wheat market.
“It’s so thin,” Stuart Attridge, trader at Harlow Agricultural Merchants observed. “You come in one morning thinking this has all gone far enough and next thing the shippers all become sellers, there’s no spot business done and then you get somebody who wants to buy and you can’t sell,” he told Agritrade News. “It is a real funny one this, very tight both ways.
“It’s all about currency, the whole thing,” he explained. “It’s 88.20 (pence) against the euro today. It’s a bit of a change from 86.5p a week to ten days ago.
“Milling wheat in the south west is going as feed,” Mr Attridge noted. “It just can’t afford to travel.” He described market conditions as “very, very difficult.”
The AHDB reported mixed movement for world market wheat prices in the week to last Friday noting that US old crop wheat had strengthened slightly on the anticipation that tightening Black Sea supplies would mean a pick-up in US exports. “However proof of this trade shift is yet to happen,” it stated. AHDB also said that, despite the, temporary end to the US government shutdown, the flow of US government reports has been slow to restart, leaving the market in the dark about actual grain export levels.
There had been little movement in UK markets, the analyst continued, “with weakening sterling negated by falling Paris wheat futures, as EU exports remain sluggish despite the latest Egyptian tender”. Egypt’s state buyer GASC has bought 360,000 tonnes of wheat from France and Romania. “The purchase of European wheat was bullish for European markets in mid-week and bearish for US markets,” the AHDB said.
The US government is backing wheat (and other grain and oilseed) exports with an award of $200 million to 57 organisations under the Agriculture Trade Promotion Program (ATP), a sop to a farming community suffering from the effect of President Trump’s trade spat with China. US Wheat Associates (USW) got $8.25 million, to be distributed over the next three years.
USW and the National Association of Wheat Growers (NAWG) said in response that they were pleased that “US wheat growers now have the opportunity to increase efforts to expand export market access.”
“US wheat growers are facing tough times right now with the impact of retaliatory tariffs putting a strain on the export market and threatening many decades worth of market development,” stated USW chairman Chris Kolstad.
“This funding will provide some relief to the adverse impact wheat has felt since the US placed tariffs on Chinese goods, opening the door for retaliation,” added NAWG president Jimmie Musick. “We hope to see these affected markets opened again quickly.”
USW is supported by payments from growers, who contribute a portion of their sales, qualifying the organisation to apply for matching funds through programmes like the Market Access Program (MAP) and the Foreign Market Development (FMD) program.