UK: Sterling hits eight-year high against the euro, affecting the grain market

Published Dec 17, 2024

Tridge summary

Since August 2024, the strengthening of sterling against the euro, reaching its highest level in over eight years, has had mixed effects on the UK agricultural sector. While it has made EU cereals and oilseeds imports more competitive, it has also increased export costs. This has led to a significant increase in wheat and maize imports from the EU, particularly from Germany, Denmark, Poland, and France. The trend of sterling's strength from September to November, coupled with anticipation for potential changes in US and UK interest rates, is impacting commodity prices and market dynamics.

Disclaimer:The above summary was generated by Tridge's proprietary AI model for informational purposes.

Original content

Sign up to receive the Weekly Market Report and Grain Market Daily from AHDB. Since August 2024, sterling has tended to strengthen against the euro. During this period, from the low in August to the high last week, sterling has appreciated by 4.5% against the euro to £1 = €1.2134 (LSEG). For UK farmers this means that imports of EU cereals and oilseeds are more competitive and exports from the UK are not stimulated. The current sterling-euro exchange rate is at its highest level for eight and a half years (since the day after the UK’s referendum on EU membership) and its putting additional pressure on commodity prices. On the other hand, for UK farmers, inputs imported from eurozone countries may be cheaper due to stronger sterling. Indeed, the historically low level of the UK wheat production in the current marketing year (-20 % change year-on-year) and quality issues are accelerating additional grain imports. However, the strengthening of sterling against the euro is providing ...

Source: Ahdb