U.K. wheat sales jumped to the highest in four years thanks to a slumping pound as the country nears a vote on whether to leave the European Union.
British wheat exports climbed to almost 310,000 metric tons in January, the highest for any month since December 2011, customs data show. The pound slumped to the weakest in more than a year on mounting concern about the so-called ‘Brexit’ vote in June. That’s making British products, like grain, more competitive to overseas buyers.
The U.K. has been left with a lot of wheat to ship after two successive bumper harvests, exacerbating a global glut of grain that helped send wheat prices to five-year lows recently in the U.S., France and Russia. British grain prices have also slumped, with feed wheat futures in London sliding below 100 pounds ($142) a ton earlier this month, 15 percent lower than the same time a year earlier.
“The U.K. is much more competitive,” Gary Phillips, country manager at farm adviser ODA U.K. in Cambridge, England, said by phone. “Declining currency values across the last three months, stimulated by the Brexit debate, have been helpful.”
Opinion is divided about whether farmers would benefit or be harmed if the U.K. decides in June to leave the EU. Some, including former Environment Minister Owen Paterson, have said that an exit would free U.K. farmers from burdensome EU regulatory requirements.
Those in favor of staying said an exit might put British trade with the EU and other major partners at risk. A Yorkshire Agricultural Society study last month found that farmer subsidy payments would likely fall in the medium term.
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Most of the U.K.’s wheat exports in January were destined for EU countries, with more than 175,000 tons shipped to Spain, according to the data distributed Tuesday by the Agriculture & Horticulture Development Board. Even France, the EU’s biggest wheat grower and exporter, was a customer, with the U.K. shipping almost 30,000 tons there.
Anecdotal reports suggest exports may also have been large in February, said Brenda Mullan, acting senior analyst at the AHDB in Kenilworth, England.
“U.K. prices have become relatively more competitive because of the weakening of sterling against the euro,” she said. “We obviously had a huge harvest and a lot of availability, so we needed to become more competitive to secure that demand.”
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