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London wheat fell 60p yesterday having been up £1 on Wednesday. Sterling firmed marginally against the euro despite Bank of England voting 8 – 1 to keep interest rates on hold.
Wednesdays USDA report has been perceived as mildly bearish, it highlighted plentiful global supplies and stocks.
E.U stocks put at 8 year high, French wheat double the ‘normal’ as exports are not keeping up with supply. Reports are that autumn plantings in France (wheat and barley) may increase at the expense of spring drillings.
Whilst reports have focused on supply, demand has not been highlighted, this may be reduced due a mild autumn (feed demand, bird flu) and biofuel down (Abengoa).
Attention will switch to northern hemisphere wheat harvest and any crop scares (Ukraine, Russia) but stocks give some insurance.
US markets were firmer on corn and wheat despite nothing fundamentally changing. Corn, soya and wheat are near 5 year lows and appear reluctant to break lower, does this mean the lows are established? Funds are very short, there may be short covering and position reducing before the Christmas break.
Oil prices continue to struggle, despite US stocks reducing for tax reasons rather than increased demand.author: Joe Beardshaw