Sterling weighs on grain and oilseed prices: Grain market daily

• UK feed wheat futures (Nov-25) closed down £0.30/t (0.2%) at £169.00/t yesterday. The May-26 contract was down £0.40/t yesterday, closing at £180.75/t
• While UK feed wheat futures fell yesterday, the global wheat market increased. Paris milling wheat and Chicago wheat futures (Dec-25) increased by 0.3% and 0.4% respectively. Global wheat futures saw an upward price correction following the decrease in prices after the release of the USDA's World Agricultural Supply and Demand Estimates (WASDE) report on Tuesday evening. One reason for the fall in UK feed wheat futures yesterday was sterling's strengthening against the US dollar and the euro (more below)
• Paris rapeseed futures (Nov-25) increased by €7.25/t (1.6%) to close at €473.75/t. Winnipeg canola and Chicago soyabean futures (Nov-25) also gained yesterday, by 1.5% and 1.1% respectively

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Last Thursday, the Bank of England decided to reduce the interest rate from 4.25% to 4.00%, the lowest it has been since March 2023. Although this was in line with market expectations, sterling has since strengthened against both the US dollar and the euro.

Stronger sterling against the US dollar could add additional pressure for UK cereals and oilseed prices compared to global levels in the current time.

Since January 2025, sterling has tended to strengthen against the US dollar, while it decreased against euro. During this period, from 1 January to 13 August, sterling has appreciated by 8.5% against the US dollar to £1 = €1.3575 (LSEG). For the UK domestic market, this means that imports of commodities from the US, or other countries whose prices are mainly calculated in US dollars, are more competitive. Meanwhile, stronger sterling means exports from the UK to countries that price in US dollars are less competitive at the same price. For instance, imported ethanol from the US has become more attractive partly due to the strength of sterling against the US dollar.

Conversely, sterling reached an eight-year high against the euro in December 2024, after which a downward trend emerged. Indeed, it has fallen by around 4.0% between January 2025 and now. For the UK domestic market, this makes export prices to the eurozone more attractive than at the end of 2024, while the costs of imports from the eurozone are comparatively less appealing.

Looking ahead

The influence of the currency on the prices of cereals and oilseeds could increase in the near and medium term due to concerns about geopolitical issues and the state of the global economy.

For the UK domestic market, lower sterling against euro could make imports from the eurozone look less attractive, compared to the first half of the 2024/25 season. On the other hand, it could potentially also stimulate more exports to the eurozone than in 2024/25. Trade levels this season will also be influenced by the final quality and size of the 2025 UK crops, which are not yet clear due to the extremely challenging weather.

On Wednesday 17 September, markets are wating for the US Federal Reserve’s interest rate decision. It will be interesting to see the decision as it could affect both the US dollar and the commodity market as many global trades take place using US dollars.

For UK farmers, if these recent trends in exchange rates continue they could mean cheaper imported inputs priced in US dollars, but unfortunately more expensive inputs priced in euros.

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