Market Update

I was undecided on writing a report this morning as I suddenly feel highly underqualified to provide you with a market commentary! But below are a few points worth noting.

After topping 1.20 against the value of the euro earlier in the year post Brexit, the pound has dropped to 1.09 this morning. Usually, this would greatly benefit UK grain values as a weaker pound usually equates to greater export competitiveness. However, with all financial markets under pressure, the weaker pound has merely acted as “damage control” over the last couple of weeks.

The FTSE 100 has fallen by 33% since the beginning of January, which has had a huge knock-on effect.

Feed wheat for spot collection is valued at £148.00/T ex-farm this morning, whilst feed barley is valued at £125.00/T ex-farm.

OSR has dropped below the £300.00/T ex-farm benchmark this week to somewhere in the late £290.00/T’s. The trade reassures us that there is business to be done and that the domestic crush is still looking to make further purchases, but external pressures will prevail.

As for new crop values, £160.00/T ex-farm for New Year 2021 feed wheat still seems good value and sellers are coming to the table slowly but surely now that crops are starting to pick up a little after a decent dose of fert. As for new crop feed barley, £130.00/T ex-farm is offered for November and I have several customers looking to sell in this region – “when they can see the spring barley through”. The forecast for the week ahead is good to reasonable for most and may finally allow for many growers to get caught up with some much-needed land work.

There are some other stories developing in the background at the moment – but the market is obviously a little pre-occupied!

In other times, these various supply factors might have caused some price reaction, but over the past week, they have been completely swamped by the wider global economic and political situation.

The HMR&C trade data from January was released last week:

  • Total wheat exports for January were 50,300 tonnes. Of this, non-EU exports were 13,300 tonnes.  Total season exports (July-Jan) now stand at 891,700 tonnes. Remember, AHDB forecasted that the UK had an exportable wheat surplus of 2.9 million tonnes this season.
  • January barley exports were 99,200 tonnes. This is below the export pace at the start of the season, but it is an improvement on December’s performance. Total barley exports (July-Jan) stand at 1.308 million tonnes. Again, AHDB forecasted that the UK had an exportable barley surplus of 2.17 million tonnes.
  • January maize imports were 203,900 tonnes. This brings total imports (July-Jan) to 1.45 million tonnes out of the 2.3 million tonne forecast imports for the season.

Strategie Grains further cut its projection for the EU27 & UK wheat harvest for 2020 this week – reducing it by 0.2 million hectares. “wet weather throughout northern Europe” is to blame and this could mean a smaller wheat output than initially thought.

In France, persistent wet weather has significantly delayed spring barley planting. Planting was 34% complete as of the 9th March, advancing just 2% in a fortnight. By this time last year, 96% of the intended spring barley acreage was in the ground. Better weather is however forecast for the week ahead.

Over in Argentina, conditions have turned drier and several organisations have raised concern about the potential impact on yields this week. Furthermore, warm and dry weather is forecast for the week ahead. Last week, Argentina’s grain exchange trimmed its forecast for this season’s soybean crop to 51.5 million tonnes – a 3.5 million tonne reduction from previous estimates and a 5 million tonne reduction on last year’s crop.

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