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London wheat closed down £1.35 yesterday as markets calmed down after last week’s recent sharp rise the rise was provoked by pessimistic yield reports from France (French wheat 5 month high on Fridays close).
French yields are significantly down with some production forecasts suggesting 30 mmt crop. Production helped by French wheat area at historic high and crop comparisons distorted by last year’s yields being extremely high, above 5 year average.
UK winter barley yields and quality are disappointing and following the French crop results. Opinion is UK wheat will follow trend due lack of June radiation. A reduction in production combined with active July shipping programme (aided by weak sterling post Brexit) will see UK exportable surplus greatly reduced.
Whilst western Europe has suffered, Russia and Black sea are experiencing, allegedly, good yields and are aggressive sellers (£120 fob?), capping the bullish argument from France, Germany, UK etc.
Global grain production for 2016-17 estimated second highest ever
Australia creating emergency storage as they brace themselves for expected record crop.
Rise in wheat prices has narrowed price difference to corn and wheat tends to follow corn. Whilst there is still time before harvest, reports for the corn crops are potentially good.
First results from English spring barley are encouraging, good grain size, low nitrogen’s and average yields but very early days.
US markets down as weather favourable to corn and soya crops.
Brent crude remains c. $45 barrel.
author: Joe Beardshaw