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Wheat markets continue to track sideways, with small losses on London wheat yesterday negating last week's gains.
Markets will be influenced by weather, currency, politics but fundamentals of supply greater than demand overhangs market and limits rises. Funds have been buying but more due to profit taking / book squaring before Christmas break.
Sterling fell against euro partly due to Spanish election result, Argentinean peso devalued 25% making their exports more competitive.
EU wheat area for 2016 largely unchanged although France will increase slightly
Despite this spread between May 16 and Nov 16, currently £7.55, some analysts think this may increase; Wheat price £120 at 4% interest per annum = less than 50p month carry.
Russia has a habit of surprises on 25 December (they celebrate Christmas in January) e.g invaded Afghanistan on 25 Dec and Gorbachev resigned 25 Dec. Rumours are they may scrap export tax to sell surplus wheat due to weaker rouble (oil price related) and possibly indicating confidence in 2016 crop potential
Russian / Ukraine crop condition makes them vulnerable but the damage will not be apparent until spring.
At present weather is not having an impact, although it is dry in South America, especially Brazil, which will help soya prices.
Oil continues to fall, brent crude is the lowest since 2004. Heavy supplies weigh on the market, producers continue to swell stocks but with current price below expectations how much further is the downside?
Bee populations in some US states are down 23%, this has been attributed to increased biofuel production i.e corn. Bee pollination is vital to US crops, estimated to be worth $3 billion and could affect crop production.
The World Trade Organisation reached an agreement to reduce agricultural subsidies aimed to help poorer nations compete.author: Joe Beardshaw