My Word is My Bond

Much has happened since we last wrote in November. Throughout December and particularly early January grain prices locally came under pressure. Feed wheat traded ex farm down to high teens.

Falling demand on the back of the poor pig and poultry trade and the bird flu threat combined with the huge amounts of imported wheat and maize had moved market sentiments more to the bearish side of the equation.

Import/export figures to the end of November had season to date imports of wheat at 1.145 million tonnes and season to date imports for maize 1.217 million tonnes. These added to a slightly higher domestic production estimate and a reduced consumption estimate. Net result, a market that was feeling some-what under pressure.

More recently the old crop harvest 2021 wheat market has been bouncing around within a ten- pound range reacting to the latest news from Russia, Ukraine and the European/Western so called super-powers. On the days when the Fund investors were factoring in a Russian invasion of Ukraine the market moved up significantly, followed by periods when the Fund money took that risk of invasion back out of the market and prices slid away. Russia and Ukraine being two of the biggest players in the World wheat market. It was therefore World supply and demand influencing domestic price outlook in Yorkshire. Last week world wheat prices fell as black Sea exports seemed to be continuing without interruption. Easing trade concerns and rain in the US winter wheat areas, where previously it was viewed as too dry, added further to the bearish sentiment.

Thursday morning saw Mr Putin and his band of merry men start military drills with Belarus on Ukraine’s northern border. The US has called the drills- believed to be Russia’s biggest deployment since the Cold War – an ‘escalatory’ move. Ukraine says they amount to ‘psychological pressure.’ Whilst at the same time Mr Putin continues to insist that he only wants to discuss Ukraine joining NATO, and the possible arrival of western missiles into Ukraine pointing his way if that were to be the case. Whatever, in the short-term Yorkshire wheat will rally again.

In other commodities, the Egyptian quality bean trade has all but ended for the season. The market has slackened price wise and several of the Egyptian buyers can now be heard wailing that the quality of beans they have been delivered do not match the description at point of sale. This is Egyptian code for the price has gone down and I want a claim/renegotiation because it is unfair that I agreed to buy them at the higher price when the market has subsequently fallen.

This is a tactic also used by the Chinese when buying huge maize shipments from the US for forward delivery month. Only to subsequently cancel them once the South American harvest starts and the price move lower. This last week saw them cancel 380K tonnes alone.

Back home in Yorkshire, Oilseed Rape traded for the first time ever at £500/tonne + bonuses ex farm for August. Several purchases deals traded on farm and sales made into the Crush at Hull. Regardless of subsequent market movements all purchases and sales, will be honoured by Farmer, Merchant and Consumer.

At least in Yorkshire our word is still our bond!