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London wheat only saw marginal gains over last week, closing up 40p on May 20 and 85p higher for Nov 20. The present old crop/ new crop spread has increased to C.£12.
GBP has strengthened over the Easter break, this will be negative to UK wheat exports. Consumers will have an eye on cheap imports, this will give some level of resistance to new crop prices going up and may see old crop also come under pressure.
Concerns of dry weather are drawing the trades focus away from currency and back to the fundamentals. Areas of Ukraine and southern Russia are experiencing 20% less than normal rainfall and continue to support the European market. This lack of rain may be ease in the next 10 days but, until confirmed, eyes will be firmly fixed on the Black Sea region. French wheat has been trading at contract highs, a reflection of the fundamental situation. However, the global outlook for wheat production remains positive at this present time.
The UK and France are expected to see some rain towards the middle of the month, but limited to 0.5 inches, this is due to a MJO weather event, possibly too little too late!.
An agreement to the crude oil production war between Russia and Saudi Arabia has been met, during the period we have seen some of the lowest oil prices in the last 18 years. As yet, oil prices have not significantly reacted; the relationship between crude oil and rapeseed (biodiesel) is very significant. With oil prices remaining at these historic lows, the competitiveness of biodiesel and therefore European rapeseed remains significantly dampened. author: Joe Beardshaw