December 30th

Market Report

Our market reports are opinion based and are not instructions to trade. You are responsible for your own trading decisions.

London wheat traded slightly up on thin trade yesterday.

Currently London wheat is down 16% on the year, European wheat –14%, European corn -11%, but rapeseed +6%. Wheat globally had its third consecutive bumper harvest increasing surplus stocks; European corn production was down but with plentiful wheat this was ignored. The chance of problem free production for a fourth consecutive year is statistically very low, but even with a problem the surplus will absorb some of the potential increase in price.

Weather around the world is making headlines ; dry north Africa (bullish), wet south America (bearish), wet northern Europe and U.S. Lack of snow cover in Russia / Ukraine is a concern, especially with cold conditions forecast and plants not ‘robust’. Latest crop report from Ukraine 30.8% good (29.8% last week) but this time last year the figure was 40.7%.

U.K exports c. 1 million tonnes by the end of year, this will leave a big surplus to shift; January looks busy but little beyond – reluctant sellers and fewer buyers.

US markets bounced on weather influence but with funds very short any major threat could see ‘panic buying’; although funds have switched out of agricultural commodities.

U.K is struggling to compete in export markets; French wheat ignored in favour of South American wheat in recent Egyptian tender; Egypt state they have enough wheat until May.

Some analysts are predicting a weaker sterling due to uncertainty of EU vote; currently £ / $ is 1.48 with forecast of a decline to $1.41.

Oil recovered slightly yesterday but oil in March 2012 was $125 barrel now $38 barrel. Saudi Arabia has $98billion budget deficit due to oil price fall (77% revenue from oil)

author: Joe Beardshaw