Week Beginning Monday 25th March 2018

THIS MORNING’S LONDON LIFFE WHEAT FUTURES:

  • MAY 2019 – £164.00/T (£1.45/T HIGHER ON THE WEEK, £4.50/T HIGHER IN A FORTNIGHT)
  • NOVEMBER 2019 – £148.25/T (£2.65/T HIGHER ON THE WEEK)
  • MAY 2020 – £151.50/T (£2.75/T HIGHER ON THE WEEK, £5.60/T HIGHER IN A FORTNIGHT)
  • NOV 2020 – £149.05/T

 

POUND Vs EURO

THIS MORNING – 1.1637

MONDAY 19TH MARCH – 1.1676

MONDAY 11TH MARCH – 1.1530

MONDAY 4TH MARCH – 1.1670

MONDAY 28TH FEB – 1.1526

MONDAY 11TH FEB – 1.1411

 

Over the course of the past week, we have seen a “sustained” rally in the old crop market. According to AHDB, the recent gains are twofold:

  1. Investment funds are short and are buying wheat futures to cover their sales.
  2. With yet more uncertainty over Brexit, sterling has devalued again and the value of UK wheat has moved higher accordingly.

Old crop feed wheat is valued at £165.00/T ex-farm for spot collection this morning. Further forward, £170.00/T ex-farm may now be back on the table for those of you who are flexible into August – please speak with the office to discuss your requirements. We are finally beginning to see a reasonable level of interest for the April-June position from both the buyers and sellers – perhaps the industry has realised that trade must continue with or without a Brexit!

As for new crop, £140.00/T ex-farm continues to look like a reasonable offer for harvest collection with £145.00/T ex-farm on the table for November collection. £150.00/T ex-farm continues to be achievable for collection into the summer of 2020. New crop sales have understandably slowed over the past week as the new crop prices edge closer towards the cost of production for some. However, for those of you with grain to move, £140.00/T remains good value when looking at the trends over the past five years.

As we move through the course of spring, the balance between old crop exports and new crop supplies will be key to determining EU price direction – currently, firm EU exports which are competitively priced within the global market will be generally supportive in the short term, but the sheer weight of new crop wheat supplies will add pressure. Also, of course, the value of sterling against the value of the Euro will determine how much of this has a Knock-on effect to the UK market.

Elsewhere, the recent forecast over in the US has seen rainfall arriving throughout key producing regions. It has been weeks since we have seen any weather-based stories making the agri-headlines and I’m not sure if this story is significant, or merely a distraction from the ongoing Brexit situation!

Around 92 million acres worth of maize corn are due to be planted in the US over the coming weeks and if the rainfall continues, we could see some field work delays begin to take effect as soil saturation levels are already high.

Weekly progress reports will commence as normal next week (1st April) from the USDA which should give us an initial indication of planting progress.

Over in Australia, the weather is the complete opposite following the hottest summer on record since 1910. With wheat planting scheduled for early April, “any rainfall forecast will benefit soil moistures greatly to give crops the best chance of avoiding consecutive crop failures across Eastern regions”. This will also be something worth looking out for over the coming weeks.

Meanwhile, old crop OSR values increased to £305.00/T ex-farm towards the end of last week. This morning, values are slightly weaker. New crop values remain below the benchmark £300.00/T ex-farm.

After “revoking the export rights” of one of Canada’s largest agribusinesses earlier this month, China has now apparently moved to ban all new purchases of Canadian canola, further escalating tensions between the two countries.

According to the USDA, China accounts for roughly 40% of Canada’s exports of Canola and Canola based products. If imposed, we could see stock accumulation within Canada, which could potentially add pressure to both Canadian and EU markets. Furthermore, the canola market within Canada is currently running at “near-capacity”, which therefore minimises the opportunity to increase domestic production.

As a result, carry-over stocks into the next trading season are expected to increase. Overall canola supplies for the 2019-2020 trading season are expected to increase to a record 23.4 million tonnes in Canada as this increased carry-over is expected to outweigh a slight drop in production.


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