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• Wheat and oilseeds under pressure • Smaller harvest set to be confirmed • Little movement in forward prices A stronger Pound could challenge... Imports challenge UK grain prices

• Wheat and oilseeds under pressure

• Smaller harvest set to be confirmed

• Little movement in forward prices

A stronger Pound could challenge UK grain prices in the coming weeks – with UK interest rates now higher than many competing economies.

Sterling reached its highest level against the US dollar for more than two and a half years last month. It follows the Bank of England’s decision to keep interest rates unchanged at 5% – and recent cuts to interest rates in the US and Eurozone.

“A rise in the value of sterling usually puts downward pressure on UK grain and oilseed prices,” says Helen Plant, senior analyst at the Agriculture and Horticulture Development Board.

“If world markets rise, a strengthened sterling usually reduces the amount of support for UK grain and oilseed prices. But if world prices decline, UK grain and oilseed prices can fall by a bigger amount.”

Wheat imports

Prices are also under pressure from the strong pace of UK wheat imports which has continued into the 2024/25 marketing year, according to HMRC figures. This is largely due to the smaller UK cereal harvest.

Some 321,000t of wheat were imported in July – far exceeding the five-year July average of 150,000t. The amount also dwarfs the 249,000t imported during July and August last year – and the five-year average of 311,000t for those two months.

Commodity traders at ADM suggest the strong pound is limiting any potential price rally by pulling imports closer to parity.

UK prices have seen little movement, it says, although delivered premiums have firmed in a bid to keep sellers engaged.

Lower production

England is heading for one of its worst harvests on record, following record-breaking rain last winter which reduced yields, disrupted drilling dates and reduced the crucial wheat harvest by almost a fifth.

The wheat harvest for England is estimated to be more than 2.2m tonnes or 18% down on 2023, suggests the Energy and Climate Intelligence Unit – leaving the UK dependent on imports to meet demand for bread and other baked goods.

More broadly, the ECIU suggests final figures will show a drop of 13% or 3m tonnes on the five-year average for the total GB cereal harvest – comprising wheat, winter and spring barley, oats and oilseed rape.