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London wheat closed 25p down on Friday, bringing the week’s losses to £3. Much of the decline has been attributed to sterling strength, bolstered by positive domestic economic reports, although the current G20 meeting has indicated concern about UK Brexit.
Australia forecast to possibly beat previous wheat harvest record (2011-12 29.6 mmt) due to favourable weather conditions.
India, the world’s second biggest wheat consumer, may need to import up to 6 mmt and may scrap import tax. Last time they had to import this volume was in 2006-7 when wheat prices rose 50%; however this year Australia will be well placed to fill this demand if harvest forecasts become reality.
Russia may suspend wheat export tax for 2 years (Sept 15th 2016 – 2018) due to good current wheat production.
Argentina due to increase wheat area by 20% to 4.3 m hectares.
US markets closed for Labor Day. Corn and wheat bounced from contract lows despite crop tours indicating big yields. US markets have been supported by soya which has followed vegetable / palm oil markets up, despite big soya crop. Palm oil +18% year to date; soya oil +7% year to date..
China plans to dramatically increase domestic oilseed production over the next 4 years to reduce reliance on imports.
Oil currently c. $47; prices stabilised after Putin suggested Russia and OPEC should agree to limit supplies to support prices; Iran exempt as they rebuild production.
author: Joe Beardshaw