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London wheat closed down £1 on old crop and down 40p new crop, bringing the weekly summary old – 50p and new -30p, November 18 currently is a £2.70 premium over May 18
USDA did surprise some analysts; corn down, wheat sharply down and soya up. Corn yield increased to 176.6 b/acre (record yield) increasing supplies. This yield increase was a surprise considering dry growing condition in mid-west. Exports and demand are down swelling supplies. Wheat area lowest area since 1909, latest estimate down 1% compared to previous, however many analysts were expecting 4% area reduction. Soya markets saw prices up, short covering occurred as report reduced soya yield from 49.5 b/acre to 49.1 b/acre. Brazil soya + 2 mmt and Argentina – 1 mmt from previous.
China increasing imports of Brazilian soya at the expense of US, protein levels higher but also retribution for hostile trade talks from US to China
UK domestic wheat values are stable, the slow pace of tonnage coming forward is absorbed by consumers / trade shorts.
UK is not competitive in wheat export markets and imports are not viable to interior homes.
Sterling reached highest level against $ since Brexit vote; £ / euro not moving, sterling supported by unconfirmed reports. Spain and Netherlands want to maintain trade links with UK. Sterling could take a knock with news that the construction company Carillion is set to go into liquidation.
author: Joe Beardshaw