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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