CURRENCY MOVEMENTS have prompted an increase in the number of farmers making advance deals to hedge their Single Farm Payment, according to the Clydesdale Bank.

The bank’s David Douglas said that volatility of euro/sterling exchange rates had created short-term opportunities for those who take their SFP in euros and manage the exchange process themselves.

“We’ve seen a definite rise in enquiries from farmers over the past week, resulting in many producers hedging their 2010 SFP euros at an exchange rate of 90p and some fixing at 90p for both 2010 and 2011,” said Mr Douglas.

“While hedging decisions are always a matter of individual choice and market judgment by customers, the present volatility of currency markets is creating short-term opportunities for producers.”

Market economist Tom Vosa, of the European wing of the National Australia Bank, added: “Markets don’t like uncertainty and the closer the opinion polls become in forecasting the outcome of the general election, the more impact we’re likely to see on currency values.

“As this could create short-term volatility in the value of the euro, the message for farmers with SFP euros due in September is to take advantage from any of the opportunities which arise between now and the election.”

Mr Vosa added that once the new government was in place, he believed sterling would regain some strength.

“Concerning currency values later in the year,” he said, “we see no reason to change our earlier forecasts of the euro being worth 80p by the end of 2010, maybe even a fraction less than 80p.”