Wheat Markets Rally

The London LIFFE wheat future for March 2014 closed at £155.75/T on Friday (28^th March) – unchanged from the week previous. As for new crop values, the London LIFFE wheat future for November 2014 closed at £147.50/T – £1.40 lower than the week previous.

Both buyers and sellers fell quiet last week as both rather nervously kept all eyes on the political unrest developing over in the Ukraine. As mentioned in last week’s report (and as according to Agrimoney.com) the Ukraine is believed to have around 3M/T+ of wheat sold that has not yet been shipped; not only is the current unrest delaying export activity but it is also weakening currency and failing to provide prospective buyers with any long term confidence or stability, adding further problems to the situation.

As an early player in the ‘new crop’ market, as available prices currently appear to be the most likely to be affected if the above continues to materialise.

Russia’s decision to ‘tighten its military grip’ on the Ukraine’s Crimea region by sending in ‘thousands of Russian troops’ over the weekend (despite western demands that it withdraw) appears to have shook the London LIFFE wheat futures this morning.

In opening trade the May 14 wheat future has rocketed £6.25/T to £162.50/T whilst the November 14 wheat future has risen by £4.75/T to £152.25/T. November 14 has not traded above the £150/T mark since the first week of January this year.

Further adding to this morning’s price excitement is news of a cold spell across the American Midwest which is proving a serious threat to this season’s winter wheat crop which has so far enjoyed extremely mild conditions. ‘Brutally cold temperatures’ as lows as -15 degrees could also cause some short term logistical problems, ‘restricting the movement of grains’. Further south, dry conditions are also now being recognised as a problem, particularly given that there is no rainfall forecast over the next fortnight.

Physical end-user requirements are limited this morning as many buyers await further indication of both the American weather and the Ukrainian political unrest. Farm sellers also appear to be keeping quiet for the time being.

Spot collection feed wheat is valued somewhere in the early £160’s/T this morning depending on movement requirements. Pinpointing a physical carry on values this morning is difficult as there are very few buyers looking to make cover further forward at this stage. Feed barley values are moderately improved as local feed compounders look to extend their cover. Spot collection would make somewhere in the region of £135/T ex-farm. June/July collection should make £140/T ex-farm.

As for new crop values, November movement is currently being negotiated in the region of £150/T ex-farm. For those of you looking to secure as available collection, movement is currently being offered anywhere between £140-144/T ex-farm this morning depending on farm location and quality specification.

Feed barley values are currently offered at a £10-15/T discount.

Preparations for spring planting are now well underway both here in the UK and across wider Europe and although plantings are sharply down from this time last year, expectations are generally in line with the five year average. Mild temperatures and generally dry conditions are forecast for the next fortnight across the North-West and should allow for good progress to be made.

Elsewhere, OSR values are also improved this morning after showing signs of retreat towards the end of last week after an improvement to the South American weather forecast. £310/T ex-farm is currently on offer for spot collection whilst movement further forward should make £315/T ex-farm.

New crop OSR values are valued around the £290/T ex-farm position for October/November collection. As available movement could probably be negotiated at £10/T less, again depending on movement requirements.