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London wheat has been ‘choppy’ this week but currently November 17 is + £1 and November 18 + £0.60. Apart from fundamentals the grain markets are continuing to be difficult to predict due to all of the external influences (politics / Brexit, currency etc).
Defra has surprised the trade with UK wheat crop prediction at 15.16 for 2017 crop, 5.4% increase on 2016 crop, many expected c. 14.5 mmt with coceral estimating 14.75 and IGC estimating 13.9 mmt. Usual indicators of a lack of farmer selling / grain coming forward does not indicate harvest this big, prices did retreat as result but were supported by weaker sterling as political turmoil continues.
US markets started the week weaker, but both wheat and soya has had up days, corn has been quiet. Variable rain has been hampering some harvesting, whilst also impacting planting. US jobs / unemployment data is due to be published which may decide whether FED raises interest rates in Dec, rates up = $ up = bearish ag coms! Wall street at record highs as technical and financial companies benefitted from tax cuts.
Egypt buys 180,000 tonnes Russian wheat at latest tender but only up $2.20 from previous purchase 2 weeks ago, however world wheat has gone up 5% but cheaper freight has helped.
UK feed barley market is firmer, we are competitive, especially with weaker sterling enabling a series of larger vessels to be sold for November 17.
UN has reduced world wheat stocks down 700,000 tonnes, consumption estimated up 3.4 mmt, but still a record at 261.2 mmt; stocks to use ratio of 34.6 is up 1.1% year on year and 30 year high level. However it is early days; reports of a lack of rain in Russia is slowing crop establishment and potentially weaker plants going into winter. Has Russia drilled a big wheat area?
EU wheat area for 2018 similar to 2017, but oilseed area was expected up due to high prices but dry conditions have curtailed the increase. author: Joe Beardshaw