Week Beginning Monday 25th February 2019

THIS MORNING’S LONDON LIFFE WHEAT FUTURES:

• MARCH 2019 – £164.85/T (£5.25 LOWER ON THE WEEK)
• MAY 2019 – £167.95/T (£3.85/T LOWER ON THE WEEK)
• NOVEMBER 2019 – £150.00/T (£3.10/T LOWER ON THE WEEK)
• MAY 2020 – £155.85/T (£2.10/T LOWER ON THE WEEK)

POUND Vs EURO – 1.1526

MONDAY 11^TH FEB – 1.1411

MONDAY 4^TH FEB – 1.1415

MONDAY 28^TH JAN – 1.1577

Feed wheat for spot collection is valued in the region of £166.00/T – £167.00/T ex-farm this morning. For those of you looking to achieve £170.00/T ex-farm, it may be possible to negotiate movement into June/July – please speak with the office to discuss your requirements. Given that £170.00/T ex-farm slipped off the board towards the end of last week – this opportunity should not be dismissed lightly!

As for old crop feed barley, £150.00/T ex-farm currently looks like a big price an there is hardly a premium offered for movement into the summer months. The mild winter weather alongside excellent prospects for a plentiful barley crop next year, buyers appear relaxed and are reluctant to overpay.

£145.00/T ex-farm looks like a realistic offer for September wheat this morning, with August movement trading at a few pounds per tonne less than this. £146.00/T-£147.00/T ex-farm looks reasonable for November collection, whilst the benchmark £150.00/T ex-farm is offered for February/March collection. Again, these values should not be dismissed lightly, particularly given the sizeable forecast for this year’s Northern Hemisphere harvests.

Both the old and new crop OSR market has suffered extreme volatility over the past week with values fluctuating anywhere from £315.00/T – £300.00/T ex-farm for spot collection. This morning, values have bounced back towards the £310.00/T ex-farm position following the USDA announcement that China have agreed to purchase 10 million tonnes worth of US soybeans; a “positive step forward” in light of the recent tensions.

Longer term, France, Germany, Poland and the UK are all forecast reduced OSR areas this year, which could potentially bring a multi-year low crop.

Egypt was once again in the market for wheat last week, purchasing 360,000 tonnes of wheat for April shipment. This included 180,000 tonnes of French wheat, and 60,000 tonnes each of Romanian, Russian and Ukrainian origin wheat. Noticeably missing from the list of offers was the US, raising concerns that the US export market is slowing. As a result of this, the Chicago market fell towards the end of last week setting a new low for the current 2018-2019 trading season. Both the French and UK markets were pressured following the tender.

According to AHDB, the physical UK wheat market appears to be resisting some of the losses seen within the global futures market since the beginning of the year. For example, the May 2019 London LIFFE wheat contract has fallen £14.00/T since the beginning of January, whilst the physical ex-farm price for May 2019 has fallen by around £5.00/T.

With the futures market seemingly disconnected from the physical market, please speak with the office to discuss your requirements as the “movement on the screen” may not accurately correlate to any movement within the physical market.

Elsewhere, the latest information from the USDA has confirmed that this year’s US maize corn crop is to increase by 3% from last year to 37 million hectares. If realised, the area will be the largest planted for three years.

In addition, a slight increase in the spring wheat acreage has brought the total wheat acreage to 19 million hectares. This is now just a 1.7% reduction on the previous year – previous estimates suggested that the winter wheat area was down 4% on last year. Furthermore, prospects are extremely good for this year’s winter wheat crop following excellent establishment and a mild winter.

This, alongside a large maize corn harvest could pressure the market. With this in mind, I would expect the market to become increasingly weather sensitive as we head into April when maize corn planting commences over in the US.

Also, it is worth noting that the growth in grains unsurprisingly comes at the expense of soybeans. The area planted to the crop is forecast by the USDA to fall by almost 5% from last year to just over 34 million hectares.

To finish: Old crop wheat at £170.00/T, New crop wheat at £150.00/T and OSR at £300.00/T are all above average prices!!