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London was up nearly £1 yesterday but it has been within this range for the last few months. European wheat and corn markets have also been tracking sideways, but the fundamentals of plentiful wheat supplies overhang the market.
UK supply / demand has not been helped by continued mild weather, reducing domestic demand for livestock feed.
U.S markets lost some of the recent gains due to stronger $ and reduced crop concerns due to rain in Midwest & Plains. Funds have increased their short position in wheat, USDA report due Wednesday.
83% of the Ukraine winter plantings has emerged, 1.1 m. hectares still to emerge; of the emerged crops 66% rated good / satisfactory, meaning 1.9 m. hectares weak / thin. Russian crops helped by recent moisture.
Oil prices fell to lowest levels since 2009 after OPEC decided not reduce production. Saudi Arabia has a budget deficit and dwindling foreign currency reserves but it is maintaining a policy of maximising market share. Their strategy of keeping oil cheap will delay further shale gas developments. Fall in oil prices has seen Russian rouble fall, making Russian wheat cheaper.
Thursday will see a new government takes office in Argentina; there are rumours of cutting soya export tax from 35% to 30%; less than expected, keeping Argentinean soya expensive.
author: Joe Beardshaw