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London wheat closed up 85p on old crop and £1.25 up on new crop; May – November carry now £13.80.
UK markets supported by weaker sterling, currently €1.2453 and $1.4154 against the £. It is felt economic growth will be subdued due to uncertainty regarding Brexit vote and a slowing world economy. Weaker sterling is helping spot demand for wheat, spot prices appear cheap considering forward carries. Also, corn wheat differential is increasing.
No significant weather markets are appearing, although some reports of potential Black sea and eastern European crop losses.
Morocco may need to import 4 mmt wheat, recent dry weather is expected to cut their production by 54% compared to last year; however last year was a record crop.
There is debate about the level of UK spring barley drilled, reports range from 60% - 80% of English crop planted; 75% safe bet? Shorter growing season can impact on yield and quality (higher nitrogen?). Feed barley feels tight, this is leading to questions about supply / demand numbers (more fed on farm?). Lack of French exports to China means UK price rises will be limited, especially with new crop approaching; traditionally UK exports cease from March.
U.S markets saw soya retreat after recent rally; Brazilian real weakens and biodiesel stocks are heavy. Ethanol, a big user of corn, has seen production exceed demand, US ethanol even exported to Brazil.
Mineral oil prices are down, stockpiles increase as Iran ramps up production, this is putting further pressure on the upcoming Doha meeting set for the April 17th and that is aimed at curbing production. author: Joe Beardshaw