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Yesterday’s trade was quiet, May 18 London wheat closed unchanged and November 18 up 25p. Lack of sellers continues to frustrate buyers
; on paper there should significant volumes to trade but markets do not feel like it.
Sterling has held most of the recent gains against the euro (+ 1.14) despite latest inflation figures falling to 2.7% from previous 3%, this has largely been attributed to lower petrol prices. Falling inflation has reduced pressure to increase interest rates; an interest rate rise had been predicted for May and would also be supportive to sterling. Some economists foresee an increase in wages exceeding the rate of inflation, this may also further reduce pressure.
US markets also quiet, but soya and meal had modest gains. Winter wheat still suffering from drought, crop ratings are down again, apart from Louisiana and Mississippi. European, Russian and Ukrainian wheat crops will have more market impact than the relatively insignificant US winter wheat (less than 5% world wheat crop)
Weather forecast predicting another possible cold blast in UK for Easter; snow a possibility, especially in the north.
Oil up 2% (Brent $67.50) reaching 3 week high as world glut is reduced and US sanctions against Iran (oil exporter). Supply / demand could reach equilibrium by September, sooner than expected; OPEC supply restrictions appear to work but higher prices could see increased US shale output.
author: Joe Beardshaw