Week Beginning 12th February 2018

Feed wheat is STILL trading within the £140.00/T – £144.00/T ex-farm position for spot collection and trade has slowed (and become rather tedious) over the past week.

As for new crop wheat, £140.00/T ex-farm is still offered for September collection and is attracting good seller interest.

OSR values have fluctuated by £12.00/T over the past week and current ex-farm values are in the region of £290.00/T – £295.00/T ex-farm. Farmers appear to be holding out for £300.00/T ex-farm and I dare say that the first merchant to offer such a price for spot collection will have a lot of old crop OSR to buy!

According to AHDB, the pace of EU soft wheat exports has continued to struggle this season. Since the 15^th December, the EU has exported just 2.6 million tonnes of wheat, the lowest amount exported over this period since 2011/12.

As of 28^th January, EU soft wheat exports were 12.2 million tonnes for the season to date, 2.8 million tonnes lower year on year and the lowest volume since 2012/13.

They added that a number of factors are “preventing the EU from being able to export large volumes of wheat this season”.

Firstly, the value of the euro has continued to climb in recent weeks, reaching its highest point for more than three years against the dollar on the 2^nd February. As a result, a stronger euro has made EU exports less competitive within the global market.

Secondly, the mild weather in the Black sea has led to Russia being able to maintain a strong export campaign throughout the winter months when usually by now, grain movement are quite literally ‘frozen’.

If the EU cannot pick up the pace in the coming weeks, we could be looking at a larger carryover stock than initially estimated.

This month’s edition of the World Agricultural Supply and Demand Estimates (WASDE) from the US Department of Agriculture (USDA) arrived last week and the overall results brought little change to the global market. Global ending stocks for all grains are now projected to be a staggering 637 million tonnes higher on the year previous. Here are a few further points worth noting:

• Global 2017/18 wheat supplies are increased, primarily on higher production forecasts in South America in the late harvest stages.
• Despite the recent weather concerns, Argentina’s wheat production is raised by 0.5 million tonnes to 18 million tonnes. However, the “persistent heat and dryness during January and early February reduced yield prospects for early-planted corn in key central growing areas”. Corn production for Argentina is therefore lowered by 3 million tonnes to 39 million tonnes.
• Indonesia is now the world’s leading wheat importer, surpassing Egypt, the traditional leader.
• Global ending stocks of wheat remain significantly higher than a year ago at 266 million tonnes.
• Global oilseed production for 2017/18 is projected at 578.6 million tonnes, down 1.5 million tonnes on last month’s estimate. Soybean production is reduced 1.7 million tonnes to 346.9 million tonnes.
• Soybean production for Brazil is projected at 112 million tonnes, up 2 million on last month as favourable weather throughout the growing season has “raised yield prospects”. As for Argentina, production is reduced by 2 million tonnes on last month’s estimate, again due to “unseasonable warmth and dryness” resulting in both a “lower harvested area and reduced yields”.

Closer to home, it has been announced this morning that “overseas sales of UK food and drink continued to soar last year , with record exports of over £22 billion demonstrating a clear desire for British taste, quality and high standards around the world”. This is a £2 billion increase since the UK voted to leave the EU.

UK food and drink businesses are now selling their products to 217 markets – with sales of milk and cream increasing by 61%, salmon by 23% and pork by 14%.An increasing thirst for British tipples has also seen bottles of UK beer appearing on shelves as far as Japan and New Zealand.

This growing hunger for UK produce reveals the “huge opportunities for producers and manufacturers as the UK prepares to leave the EU”. As the PM demonstrated in her recent trip, China is now the 8^th largest export market for UK food and drink. Over £560 million worth of food and drink was bought by Chinese consumers last year, showing a particular preference for UK salmon, whisky and pork.

I know the above perhaps isn’t directly linked to the UK grain market as such, but it definitely makes for encouraging reading.