Week Beginning 11th January 2016

The London LIFFE wheat future for January 2016 closed at £111.00/T on Friday evening (8th January), £3.00/T lower than the week previous. By Thursday, the future had initially retreated to £109.80/T before adding £1.20/T the following morning.


In opening trade this morning, the value is unchanged and ex-farm bids are currently at the equivalent of £108.00/T for February collection. With Vivergo still closed for maintenance, January movement is extremely limited and any small offers for January delivery elsewhere in Yorkshire are at a significant discount to those for the following month.

Also, it is important to note that the pound was slightly weaker against the Euro towards the end of last week, hence the slightly firmer wheat futures. Although this doesn’t suggest that values will continue to firm, it could mean that UK wheat has at least a better chance of competing against European wheat values.


Old crop OSR values have rallied back to the £260.00/T ex-farm mark for Feb/March collection. Trade opinion is split on this price – for some, the imminent arrival of South American soybean supplies within an already oversupplied oilseeds market should be enough to add pressure to both old and new crop values. However, a significant decrease in palm oil supplies due to a decrease in yields should at least compensate for some of the above.


As for new crop values, the London LIFFE wheat future for November 2016 is this morning valued at £124.50, the equivalent of £120.00/T ex-farm for November collection. For those of you looking to move wheat straight off the combine at harvest, anywhere between £113.00/T – £115.00/T would be a reasonable offer this morning.


Argentina’s wheat production for harvest 2016 is now forecast in the region of 10 million tonnes – the upwards revision is said to be attributed to “higher than expected yields”. Wheat supplies are already coming to the market in high quantities and are proving to be a significant concern for the US in particular. 

According to the latest export sales data, released by the US Department of Agriculture (USDA) towards the end of last week, shipments of wheat from the US are at their lowest levels since the marketing year began. For the week ending 31st December, the US exported just 76,000/T of wheat – significantly below the 400,000/T that was expected.


Meanwhile, exports from the Black Sea region remain fierce although this could also change with the imminent arrival of South American supplies. Both Ukraine and Russian currencies are extremely weak at the minute – especially compared to the pound. According to Agrimoney.com, the Ukraine have exported just over 21 million tonnes worth of grain so far this season. Russia have exported slightly less at 20.5 million tonnes.


As for next season’s US crop, key winter wheat growing states have been hit by extensive storms over the last month and as a result, a ‘question mark has arisen surrounding the condition of the growing winter wheat crop’. 

However, markets were last week reassured that this year’s crops is in fact in a better condition than last year’s with the release of various ‘crop progress and condition reports for selected states’.

The HGCA have added that on closer inspection, ‘some noticeable deteriorations can still be identified compared with a month earlier, particularly for Illinois, which was badly hit by heavy rains last month’. Other areas further North are also beginning to show small signs of deteriorating.


However, the HGCA have also added that with ‘good/excellent condition ratings all over 50%, which is higher than last year for most states, it could be concluded that the unfavourable weather so far has done little to damage the 2016 crop, adding further bearishness to the wheat market’.


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