Week Beginning Tuesday 2nd January 2018

Happy New Year! A very brief update for you this morning.

• The London LIFFE wheat future for January 2018 is currently valued at £136.25/T.
• The London LIFFE wheat future for November 2018 is currently valued at £142.25/T.
• The London LIFFE wheat future for November 2019 is currently valued at £144.25/T.

Feed wheat for spot collection is remarkable still valued in the region of £142.00/T – £144.00/T ex-farm despite a significant lack of end-user demand. It is however only the second day of the year and this could change next week – perhaps these values are worth taking advantage of before normal business resumes next week?

As for feed barley, current values are trading in the region of £130.00/T ex-farm. There are also some limited opportunities available for old crop malting barley – please speak with the office to discuss your requirements.

In their final 2017 “UK crop areas and yields report” published between Christmas and New Year, DEFRA have revised their initial estimate for UK wheat production to 14.84 million tonnes – this is 326,000 tonnes lower than the provisional estimate published in mid-October.

The main driving force behind the downward revision of wheat production is a lower estimated yield of 8.3 tonnes per hectare (the provisional estimate was 8.5 tonnes per hectare). On a regional basis, the largest downward revision in yield was for Scotland, now estimated at 8.1 tonnes per hectare, (a significant decline from the 9 tonnes per hectare initially estimated). Perhaps Scotland didn’t quite have such a record breaking harvest after all?

With a lower 2017 wheat production figure, could we see UK wheat supply and demand tighten? Or will we see a decline in wheat demand due to the closure of Vivergo? This will hopefully be reflected in the next balance sheet update this month.

According to AHDB, 2017 has been a year “characterised by ample supplies which have subdued prices and resulted in a lack of volatility, particularly in recent months”. As 2018 gets underway and we reach the half way point of the current 2017/2018 trading season, here are some key areas to be aware of over the coming weeks:

• South American Crop Development – they hold a significant market share in exports of both soybeans and maize. Plentiful rainfall throughout the festive period may have proved beneficial for crops in the North, the impact of delayed planting of soybeans in Brazil requires monitoring as this could impact on maize plantings later in the season. The Brazilian government will release its next production forecasts on the 11^th January.
• “Global grain stocks are less ample than they appear” – Headline global grain supplies are high but there’s uncertainty over “available” stocks due to the large proportion held in China. A watchful eye should therefore be kept on supply and demand estimates in the months ahead – the next WASDE release is the 12^th January.
• Wheat areas for Harvest 2018 – The USDA’s long range projections have predicted the US wheat planted area to fall to historic lows in 2018. A lower area for this major exporter of wheat means a potential increase in reliance on Russian and Ukrainian wheat crops next season. The USDA will release the results of its winter planting survey on the 12^th January.
• UK wheat demand levels – From a UK perspective, there is uncertainty over current demand levels following the shutdown of Vivergo.