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London wheat registered small gains (c. £1) last week as agricultural commodities generally found support.
UK March 16 wheat exports were 383,000 tonnes, a monthly increase of 28%; barley exports were 300,000t.
Weaker sterling and export demand has helped reduce UK wheat surplus but further export activity will be required, especially as wheat import tonnage has added to the balance sheet. AHDB estimates 2016 UK wheat crop at 14.5 mmt, down from 16 mmt harvested from 2015 crop.
French wheat stocks reduced 4 mmt (29% down from previous month) as exports, especially North Africa continue. French wheat rated 87% good to very good (91% this time last year).
Russian wheat is benefitting from good growing conditions (62.5 mmt?); if this production becomes reality they will be major exporters, export tax has not curtailed exports from 2015 harvest.
Canada predicted to have smallest wheat crop since 1960’s; how much impact this will have on the world market is yet to be seen, especially with big export producing countries showing good potential crops.
US markets have been supported by soya, big demand (+4.6%) for meal and oil. 66% of soya meal demand for meal will be decisive. Oil helped by tight palm oil supplies. Last week’s USDA report highlighted soya demand, this provided spill over support to corn and soya. High price of soya could see some growers switch from corn to soya. However, corn and wheat stocks remain at very high levels.
Wheat tends to follow corn and US corn is benefitting from exports to Brazil as domestic stocks are tight but supplies may appear as Brazil starts harvest.
French corn 78% planted against 89% this time last year.
Sterling remains nervous as debate on Brexit gets hostile between the ins and outs, both using scare tactics.
Brent crude remains just below $48. Any price increase will see Saudi increase production; although Saudi ‘strategy 2030’ aims to reduce reliance on oil and gas (currently 90% of income). They plan to sell shares in national oil company Aramco and expand economy into petrochemical, mining, construction and tourism.
Budweiser plans to temporally rename its beer as ‘America’ to cash in on current national sentiment.
author: Joe Beardshaw