A rising world market and a cheap pound mean a strong start to 2020 for wheat trading. Relief that a deal was reached with the EU has helped positive sentiment.
“We are in a very lucrative and very exciting market,” Stuart Attridge, trader at Harlow Agricultural Merchants, told Agritrade News. The last-minute agreement over a deal between the EU and the UK meant that “we can still retain our normal position on exports,” he added. “It’s brilliant news and, of course one of the benefits that we’ve got is that currency is currently not as strong as we thought it might be.”
“There’s still this uncertainty on currency and overseas investment,” he noted. “European trades are still a little bit nervous about throwing all their eggs our way at the moment until we get some sort of clarification.
“That’s just helped us at this stage on currency,” he explained. “It makes the imports that much more expensive and it’s supporting internal prices.
“We’ve got some very happy farmers, but very unhappy that they haven’t got so much to sell,” he added.
There were no disruptions to movement. “That has all been working rather nicely so all is going well, the roads aren’t overly busy, but they are busy enough,” Mr Attridge reported.
“Markets are being completely driven by US soya and maize prices,” he explained. “It’s all La Niña and the Argentinean export ban on corn for the time being. There are big export quantities of corn and soya going from the US to China to rebuild their pig herds.
“Wheat is the poor relative that is getting dragged along,” he said. “It’s all good news now. It’s all heading in the right direction.”
On December 30th, Argentina’s agriculture ministry announced the suspension of maize sales for export until February 28th, a move designed to ensure sufficient supply of food on its domestic market. The news agency Reuters quoted a ministry statement saying that “this decision is based on the need to ensure the supply of grain for the sectors that use it as a raw material for the production of animal protein such as pork, chicken, eggs, milk and cattle, where corn represents a significant component of production costs.”
The statement said that so far, 34.23 million tonnes of 2019/2020 maize had been authorised for export, of an exportable total of 38.50 million. “The objective of the measure is that the remaining 4.27 million tonnes remain available for domestic consumption.”
According to AHDB, the final DEFRA figure for wheat production is 9.658 million tonnes, a 40.5% fall on the previous year and the lowest since 1981.
“The smaller crops confirm the UK’s dependence on imported grain in the 2020/21 season,” the Board said in a January 4th 2021 market report. “The UK’s free trade deal with the EU-27 means imports from this key trading partner continue without tariffs. But there will still be additional costs and AHDB analysis estimates these at 2% to 5% for crops.”