Market Report wc 30th March

The US government and senate agreed to a new “stimulus package” last week in an attempt to reduce the impact of the coronavirus outbreak on the US economy. The package, which totals $2 Trillion, is yet to be approved by congress but is viewed as a step in the right direction. In response, the value of the dollar declined against the value of sterling. 

The recent weakness in the dollar is supportive of the value of US priced commodities. This has pressured UK values over the past week. Fluctuations to currency have the ability to have an immediate effect on prices – therefore the short-term market will largely be underpinned by currency movements.  

At its peak, the November 2020 London LIFFE wheat future topped £175.00/T – this morning this is valued at £169.50/T. Regardless, the new crop future remains firmly above its recent averages.  

Currently, domestic supply and demand is well balanced in the short term and for now, the supply chain is performing well. There has been an increase in demand, but this has been well responded to and again for now, grain is moving as it should be. Longer term, we could begin to see some logistical issues with staff availability both on the road and at the point of collection or delivery. However, with no indication of how long the pandemic will last here in the UK, we are very much continuing to “play it by ear” and respond accordingly. 

Feed wheat for spot collection is struggling to make £160.00/T ex-farm this morning and trade is slow. At its best last week, feed wheat was tradeable in the region of £165.00/T ex-farm for spot collection. There are some limited opportunities for milling wheats – please contact us to discuss your options.  

Again, although I am no Coronavirus expert – theses prices remain historically high and could be a good opportunity. There are too many uncertainties to determine market direction at the moment, all you can do is take advantage of these higher prices as and when you see an opportunity to lock in profit. The current marketplace is being heavily underpinned by currency and specifically the value of the pound – the longevity of these firmer prices will therefore largely depend on how long sterling remains weak. Try not to become too complacent with the current levels! 

For those of you with the time (who are bored), there is an interesting article on AHDB’s website this week regarding Brexit as despite the Coronavirus distraction, plans are still being put in place behind the scenes.  

The EU currently has 40 trade free agreements (FTA’s) in place covering 70 different countries. As of the 1st January 2021, these agreements will no longer apply to the UK. Currently, the government is working to negotiate roll-overs and has achieved 20 agreements, covering 50 countries. However, these agreements are based upon the UK’s regulations as they currently stand – in line with the EU’s. Should the UK diverge substantially from this benchmark, countries may then wish to re-examine the terms of their FTA and reopen negotiations regarding quality of standards.   

Alongside product standards, there are other EU regulations and governing factors which affect the cost of doing business – state subsidies, environmental legislation, taxation and labour protections make up a set of common rules and standards that ensures members of the EU cannot undercut each other by, for example, lowering any of these standards.  

Given the UK economy’s size and geographic proximity, the EU is anxious to avoid a situation where a divergence from these standards would give the UK a competitive advantage.  

To explore this topic further – please see: 

SPRING SEED AVAILABILITY: We are still moving top-up bags of both spring barley and oats onto farm this week – please be patient with delivery, we are delivering as fast as we can. Some varieties are still available – please contact us to discuss.  

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