Fears that Brexit will hurt U.K. trade with Europe are spurring an export boom for British farmers.
Britain shipped record levels of wheat to France in July and August as concerns the U.K. will face tariffs on trade with the European Union when it leaves the bloc drove the pound lower, making exports more competitive. French buyers have been importing more of the grain after flooding hit the nation’s crop.
“The market has been going really crazy with Brexit and is looking more optimistic with a weak sterling driving support for wheat exports,” Benjamin Bodart, a director at adviser CRM Agri-Commodities, said by phone.
The U.K. exported 78,099 metric tons of wheat to France in July and August, the highest in data going back to 1992, Agriculture and Horticulture Development Board figures show. Total exports more than doubled to 255,857 tons from a year earlier, the fastest start to the export season in six years.
The boom for farmers follows the pound’s slump since Britons voted to leave the EU in a referendum in June. They’re set to benefit further after the currency last week sank to a 30-year low against the dollar amid a war of words between U.K. and EU politicians on whether the country can retain tariff-free trade.
Wheat for December delivery rose 0.7 percent to $4.06 1/2 a bushel by 9:37 a.m. in Chicago.
British exports to Spain also rose to 90,553 tons in July and August, the highest since the 2010-11 crop year. Even euro-denominated subsidies for U.K. farmers that the EU will halt when the country leaves are now worth more in pounds.
France is boosting imports of wheat, not just from the U.K., after excess rain in spring hurt farmers’ yields, with the agriculture ministry estimating soft-wheat production in the EU’s largest producer fell 32 percent from a record last year.
Not all U.K. farmers are gaining from Brexit fears. As the pound sinks, the cost of feed is rising for those relying on imports for feed for their animals.
“The weak pound makes imports expensive,” said Newmarket, England-based Bodart. “Overall, Brexit is good for farmers and producers at the moment and not so good for consumers but to see the negative effects we need more time.”