Week Beginning Monday 4th February 2019

 THIS MORNING’S LONDON LIFFE WHEAT FUTURES:

• MARCH 2019 – £169.85/T (£0.60/T DOWN ON THE WEEK)
• MAY 2019 – £172.00/T (DOWN £0.25/T ON THE WEEK)
• NOVEMBER 2019 – £154.15/T (UP £0.40/T ON THE WEEK)
• MAY 2020 – £160.60/T (DOWN £0.65/T ON THE WEEK)

POUND Vs EURO – 1.1415 (LAST WEEK – 1.1577)

The old crop wheat market has stalled over the past week following a month of downward pressure. Feed wheat continues to be valued in the region of £170.00/T ex-farm for spot collection. Last week, we did have some small opportunities at £175.00/T ex-farm for April collection, but these were quickly filled, and buyer demand continues to be limited post-March. With currency constantly fluctuating, any small opportunities such as these should certainly be worth some consideration, particularly for those with plenty of old crop left in the shed.

Locally, feed barley is trading at roughly a £10.00/T discount to feed wheat. Nationally, the difference between the two is roughly £12.00/T. AHDB have added that “with the rising discount of feed barley to feed wheat, this highlights a possible opportunity for those who can, to switch to feed barley for the remaining winter months”. Furthermore, ex-farm feed barley is now at a minimal premium to imported maize corn, making it appear more competitive.

Long term, it is difficult to say what will happen to the price of feed barley but here are a few things to consider:

• Export opportunities for malting barley are limited, could we therefore see intended malted barley ending up as feed stocks?
• Winter weather / grass availability.
• The proportion used within pig finishing / poultry units – maize corn is rarely fed to chickens due to the yellow colouring of the meat.

As for the new crop market, the benchmark £150.00/T ex-farm is now available for October 2019 collection. Looking ahead, £150.00/T ex-farm is also available for January 2021 (for the 2020 crop). With almost £30.00/T separating the old and new crop wheat prices at the moment, this difference will have to narrow at some point. Judging by the amount of winter cropping in the ground both here and on the continent, all of which currently looks well…. I would day that the old crop premium is at risk of declining.

The global market generally has lacked any fresh news over the past couple of weeks as we await key data from the US this month. There is some concern regarding the cold snap over in the US, which has centred over some of the key US producing regions. However, there are no guarantees with this and the bulk of the information is largely speculative. Over in the Southern Hemisphere, “soil moisture in key regions for the Brazilian second maize crop” is low following the soybean harvest. Moisture will therefore be needed to drill and establish this crop and forecasts are mixed.

Last week, Egypt purchased 360,000 tonnes of wheat for March shipment from both France (180,000 tonnes) and Romania (180,000 tonnes). Although this may seem like nothing unusual, it is hugely significant that European wheat has successfully secured business with Egypt – this was the first French sale to Egypt since July 2017.

Russia has “dominated wheat exports to Egypt this season” and according to AHDB, they have accounted for over 70%. However, in this particular tender, Russian wheat was more expensively valued than a French equivalent – presumably due to the extra handling costs now that certain Russian ports are beginning to Freeze over and near-dock supplies are gradually being depleted.

The latest figures have confirmed that wheat exports from Russia have slowed considerably this year; 3.7 million tonnes of wheat was exported in December, whilst 1.9 million tonnes was exported in January.

This brings this season’s total (as of the end of January) to 26.5 million tonnes. Total wheat exports for the season are 35 million tonnes – it will be interesting to see if this figure is revised higher anytime soon as market speculation suggests.