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London wheat closed up 25p on Thursday to consolidate weekly gains of £1.90 old crop and £1.60 new crop, currently the May 16 – November 16 carry is £13.75 and May 16 – May 17 is £20.95.
This is the time of year when crop conditions are monitored and production estimates are published. The latest from MARS has EU wheat production down 5%, but corn up 11% as last season’s weather boosted wheat but hampered corn. French wheat is 92% good to excellent and winter barley 93% good to excellent.
After the second wettest UK winter since detailed records began, crops are showing big variations in condition, ‘the good, the bad and the ugly’!
Crops have sat in wet conditions and spring drilling is taking place but seed beds are far from ideal; it is too early to predict but yield would appear to be vulnerable.
US markets were open to trade yesterday, wheat saw gains as there continues to be concern about dryness in the plains.
Non-commercials still have a large short position in wheat and will look to reduce exposure; however they have been long in soya and benefitted from rising prices. There is a USDA report this week, this will give a planting survey and may give market direction.
Egypt recently bought 60,000 tonnes of French wheat, French ports are currently very busy but need to shift the surplus.
Dry weather in Ethiopia has led to widespread suffering and hunger; 10 ships carrying 450,000t grain are waiting to unload but poor infrastructure is not helping.
E.U forecast for spring malting barley is 9.29 mmt, this is 400,000t down compared last year (due reduced area) but this would still mean 500,000 tonne surplus. New varieties producing good yields of low nitrogen barley, combined with fertiliser restrictions (e.g Denmark) are creating concerns about too much low nitrogen barley, higher nitrogen barley aids yeast development.
Sterling has marginally firmed from end of last week. Brazilian central bank steps in to slow rise of ‘real’ which had made their exports more expensive helping US trade
Oil remains c. $40 barrel; last week’s terrorist events has made all markets nervous with investors looking for minimal risk markets author: Joe Beardshaw