Glencore Ships Biggest Ever U.K. Grain Cargo as Pound Tumbles

July 1, 2016 07:24 AM
iStock  Container ship at dockside

The biggest ever shipment of British feed wheat is another sign that the country’s grain exporters are benefiting from a weaker pound.

The U.K. grain unit of Glencore Plc is loading 70,000 metric tons of feed wheat at the Port of Immingham in northeast England, it said in a statement Thursday. Trade Prosperity, the vessel carrying the cargo, is due to sail to Vietnam in early July.

It’s rare for large shipments at this time of year because supply is usually tight before harvesting starts in July, said James Maw, managing director at Glencore Grain U.K. But British wheat used to feed livestock has become more competitive globally against high-priced corn -- especially as the pound slid in the run up to the U.K.’s vote on leaving the European Union -- and last season’s bumper crop has left plenty of grain still available to ship.

“U.K. feed wheat is still maintaining a competitive edge in the world feed-grain market,” Maw said by phone. “Sterling has helped, and U.K. wheat is competitively priced vis-a-vis corn.”

Weaker Pound

The pound’s decline this year has been a boon to the country’s grain sellers. Wheat exports this season through April reached the highest since 2012 and the Agriculture & Horticulture Development Board expects barley shipments to climb to a 19-year high. The currency dropped even more following the June 23 vote to exit the EU, touching a two-year low versus the euro and a three-decade low against the dollar.

Feed wheat futures on ICE Futures Europe in London climbed 7.6 percent in the two days following the Brexit vote amid speculation that grain exports would increase. Futures for November delivery traded at 120.75 pounds ($160) a ton on Thursday, below the comparable corn contract on Euronext in Paris, which traded at the equivalent of 139.70 pounds a ton.

Most of the U.K.’s grain exports go to EU markets, but some cargoes recently went to Asia, North Africa and even North America. Frontier Agriculture said earlier this month it planned to ship 55,000 tons of grain to Indonesia, and cooperative Openfield said in May that it was shipping a 61,000 tons of wheat to the U.S.

Through April, U.K. wheat exports totaled 2.2 million tons, 29 percent more than during the same period a year earlier, the most recent customs data for the 2015-16 marketing season show. The new crop year starts Friday.

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