When the Fat Lady Sings

This last month has proved yet again that you cannot ever beat the market. Despite all the information at our fingertips, end of season markets are very difficult to predict. A month since, the markets were factoring in spring drought in Northern Europe and the US.  Prices were firming from the March/April low of £190 for May/June collection, (how strange to be using £190/t and low in the same sentence!) and had rallied back above £200/tonne. New crop barley was £145/tonne, September wheat £180 and August OSR £415/tonne.

May 7th saw new crop wheat hit £200/tonne for May/June 2022, August OSR hit £450/tonne and old crop barley trade at £185/ tonne as realisation dawned that despite all the spring barley acreage the previous harvest, barley was in fact in tight supply, with June wheat at £207/t.

One week ago, widespread rain, US crop area plantings in front of 5-year averages and warmer temperatures saw the wheat markets drop £10 per tonne both old and new.  New crop September wheat traded back down at £180/tonne and old crop was bid on farm in a very lack lustre market below £200/ tonne.

This week has seen old crop June wheat trade back up to £210.

Volatile may be the best word to describe trading in the harvest 2020 wheat crop. Time and again this season has proved a very difficult market to predict.  Sentiment has moved from bull to bear throughout the year as weather, yields, demand, politics, currency and imports/exports have all played their part.

By mid-May, most in the trade would like to think they had a grasp on the likely remaining market movements for the last weeks of the season. Most in the trade would however be lying if they said they knew with certainty what the price of wheat on farm would be at the end of June.

Currently there are just too many unknowns in the marketplace.

For instance:

How much wheat do Yorkshire mills still have to buy to meet their demand?  Have the merchants got wheat sold to mill, but not yet bought on farm? Do the merchants have wheat bought on farm, but not yet sold to mill? How much wheat is left unsold on farm? How much wheat is sat in merchant stores?  When, and at what price, will foreign new crop wheat be available delivered UK before our own? Finally, for those who want to play the market to the death, when will harvest start and new crop Yorkshire wheat be available?  All the above and you still have not factored in World Agricultural Supply and Demand Estimates, the latest USDA report, World commodity prices, China, World weather, Brexit, Covid or if you are wearing your lucky socks! Many months ago, we started out in the Farming Casino and unless I have gone suddenly deaf my bet would be that this market has one more game to play, before up on the stage, the Fat Lady Sings her final song of the year. The final game?  Up or down?  Sell or hold?  Place your bets.  Now, where are my lucky socks?

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