Yoda – ‘lucky you are’

Yoda –‘lucky you are’

The International Monetary Fund is now saying that the World will suffer its worst recession since the Great Depression!  In the USA 16.6 million people have filed for unemployment benefits in the last 3 weeks.  Here in the UK the Office for Budget Responsibility says GDP could fall by 35% in the second quarter of the year.  They are forecasting unemployment rising by more than 2 million to 10 percent of the work force at the same time.

Grain markets and currency exchange rates react by the hour to the latest news feeds from around the World.

Covid-19 is having a massive impact on the way we live, work and eat.  The roads have gone quiet, the working day has changed, for the majority beyond recognition and there are currently no McDonald’s, Kentucky fried chicken, Nando’s or pubs!

The pandemic appears to have been the final push for a struggling bioethanol industry.  Cheap oil prices, over-supply and now empty roads resulting in ethanol production plants around the world closing.  In Europe a drastic fall in demand for bioethanol has seen some OSR crushing plants cease crushing altogether and latest estimates have UK crushing plants running at 50% of recent levels. In the US approximately 33% of the US maize corn crop will now be looking for a new home. 

In the UK wheat market, after an initial surge of ‘panic buying’ demand for old crop grain has calmed and with a strengthening pound demand is drifting and it would appear we are now adding to the end of season carryover stocks following our 16.3 million tonne wheat harvest.  The closure of breweries and distilleries is having a worrying knock on to the malting barley trade, as malt off-take slows to a crawl and old crop malting barley looks likely to clog harvest barley stores.

In other news as if all the above were not enough a plague of locust is working its way across Ethiopia, Kenya and Somalia.  Combined there are nearly 62 million acres of farmland in these 3 Countries now dealing with the bugs.  The swarms are heading east towards western Asia, including Pakistan and India. Poor logistics networks due to Covid-19 are resulting in pesticide deliveries being nearly non-existent.

On a more positive note, domestically the UK GDP is forecast to bounce back quickly.

No bio-ethanol production = no protein by-product heading into animal feed production which in turn will mean more demand for wheat and maize corn for animal feed.

In the UK a month of better weather has seen late sown winter wheat and a range of spring crops all sown and emerging in-spite of some less than ideal seed beds. 

Persistent dry weather after a dry winter in the Black Sea regions, which is usually a big supplier of export barley and wheat may impact on early new crop price trends.

Saudi Arabia has recently opened its doors to Russian wheat, after a period of no trade with the purchase of 60,000 tonnes.  Whilst recently imposed Russian ‘government export restrictions’ are likely to produce a 1.5 million tonne reduction in Russian wheat exports.

Covid-19 will undoubtedly affect us all and those of our nearest and dearest.  But we are lucky, we work the fields, tend the livestock and trade our produce whilst living in some wonderful countryside, and what is more, September wheat is still trading at £160 per tonne!

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