Week Beginning Monday 14th January 2019

THIS MORNING’S LONDON LIFFE WHEAT FUTURES:

• JANUARY 2019 – £172.30/T
• MAY 2019 – £176.50/T
• NOVEMBER 2019 – £159.50/T
• JANUARY 2020 – £162.05/T
• MAY 2020 – £164.95/T

POUND Vs EURO – 1.1192

There is a distinct lack of fresh news this week as the grain trade gets off to a sluggish start in 2019. Key USDA figures regarding global production, stocks and also US planting data were not released on Friday due to a partial shutdown of the US government.

Tomorrow (Tuesday 15^th January), members of parliament are expected to hold their all-important vote on Prime Minister Theresa May’s plan for Brexit, which was delayed from the 11^th December last year. The outcome is uncertain, but we should learn the actual extent of parliamentary opposition to Theresa May’s deal. Either way, I would expect the grain market will remain subdued this week as the trade digests the news.

Old crop feed wheat continues to trade in the region of £172.00/T / £173.00/T ex-farm for spot collection this morning with limited buyer interest ahead of tomorrow’s crucial vote. £180.00/T ex-farm for July collection is being sporadically offered but again, with physical buyers having a limited interest, it is difficult to secure an ex-farm bid at the moment.

As for new crop wheat values, the November London LIFFE wheat future has suffered significant volatility this week as the value of sterling continues to fluctuate. Feed wheat for September collection is valued around £153.00/T – £155.00/T ex-farm this morning, with £160.00/T ex-farm offered for March 2020 collection. We are beginning to see some customer interest in values beyond harvest 2020 and with current values in excess of the benchmark £150.00/T ex-farm, this may be worth some consideration. Please speak with the office to discuss your requirements.

Further afield, the EU grain trade is also slow due to heavy competition from Russia. According to AHDB, the EU continues to be a net importer of cereals this season, with a record pace of maize imports this season “outstripping the sluggish wheat and barley trade”. They added that “the slowdown in exports and rise in maize imports follows a challenging growing season with the growth of all three crops hit by drought”.

In detail, maize imports so far this season (as of 6^th January) stood at 11.7 million tonnes, a massive 48 increase on last season. Around half of the imports originated from the Ukraine, with a further 40% originating from either Brazil or Canada.

Historically, the EU’s position as a net grain exporter has been historically driven specifically by high wheat exports – this year, EU wheat exports at this stage are 25% behind on last season’s pace. The USDA have forecast this season’s EU wheat exports at 20 million tonnes. We will need to see a significant increase if this to achieve this.

Looking ahead, with EU wheat prices currently trading higher than those of the US and the Black Sea, any pick up in trade will be dependent on an increase in demand – which could potentially stem from either a decline in Russian wheat exports or any challenges emanating from harvest progress in South America.

Both old and new crop OSR markets are volatile as news of the South American soya harvests continue to drive the market. In Brazil, the earlier planted soybean crops suffered a setback in December as a result of dry weather and as these crops developed faster than normal due to high temperatures, any late season rainfall is unlikely to aid these crops at this stage. However, the later planted crops which are not as far developed may benefit from some later rainfall. Early results are mixed, and I would expect the market will continue to monitor the situation, particularly given the current political tension between the US and China; South American oilseed supplies will have a greater importance this season.

£323.00/T ex-farm is offered this morning for spot OSR, a slight reduction on the £325.00/T ex-farm offered towards the end of last week.

New crop OSR is valued so