Farming businesses which have sold forward up to 20% of their wheat crop for 2010 are placing themselves in the strongest possible position in uncertain times, a leading farming consultant said today.

Richard Means, a partner in Strutt & Parker’s Cambridge office said:

“The 2009 wheat harvest worldwide is expected to be the second biggest in history after last year’s. Prices went sky-high in 2007 as a result of the global wheat shortage but two worldwide bumper crops have followed in 2008 and 2009.

“The result of this is that prices have fallen right back. With a 2m tonne surplus in Britain still unsold since last year and the Pound weak against the Euro, British wheat currently is about £5 a tonne too expensive to be exported competitively. If we are to export the quantities we need to, either the price in Europe would have to rise while British prices stayed static which is unlikely in today’s market or the export price per tonne for British wheat would have to drop.

“We have seen recent price fluctuations of as much as £15 a day in the now extremely volatile wheat market so people are a lot more anxious about whether they are making the right call when they are selling.

“Most years a significant weather event in one of the big wheat producing regions of the world is what affects the price, for example a drought in Australia or a heavy frost in Eastern Europe, but after two unprecedented worldwide bumper harvests it is currency movements not isobar movements which are dictating prices for UK farmers.

“Testing times call for nerves of steel and we have taken a pro-active approach with our clients, with a view on predicted production costs which will be lower than 2009, and forward selling approximately 20% of their 2010 crop.

“Nobody can predict whether the recent rally in the wheat market will be sustained or what the 2010 harvest will be like. But the UK has a more reliable climate for wheat-growing than many of the producer countries we are competing with in the global market. By forward selling a percentage of the crop now businesses are putting themselves in a stronger position to manage risk than those taking a wait and see approach.”