UK Feed Wheat report

"The market this week has been completely currency driven, with the £ against the € falling to record lows, currently trading around £1 = €1.05. This has meant that currency has fallen almost 9 cents from last week," said David Sheppard, managing director, Gleadell Agriculture.

"The week has been dominated by currency, not just the strength of the Euro against the £, but against the falling US$. This, in turn, has made the US grains more competitive for export and US futures markets have rallied.

"Analysts Strategie Grains have reported that European Union grain production in 2009-10 is forecast at 293mln/t, down 6% on the year. They also commented that European Union grain plantings will be down by around 2% on the year, at 58.6 million hectares. The anticipated fall in production is also due to an expectation that yields won’t be as high in 2009-10, falling 5% from the current crop’s yield.

"The Argentinean government have put their latest estimate for this season’s wheat crop at around 9.5mln/t, down from their last estimate of 10.1mn/t, and also down compared with the USDA figure of 10.5mln/t.

"Any recovery in sterling could see the wheat price fall heavily; these current levels are a good selling opportunity to the grower unless sterling is set for much lower levels still," he added.