December 19th

Market Report

Our market reports are opinion based and are not instructions to trade. You are responsible for your own trading decisions.

London wheat closed c. 50p down on Friday but was up 30p (2016 crop) and up 45p (2017 crop) for the week.

Exports from EU are slowing, wheat is up 1% year on the year, barley down 65% and corn imports down 19%.

French wheat area for 2017 has slightly increased; early crop forecasts are estimating 37.7 mmt compared to a disastrous 2016 crop of 28mmt. 2016 crop saw production at its lowest levels since 1993.

US markets showing some resilience, especially soya which should come under pressure from big south American crop, but it is at present holding up.

Last week US Fed increased interest rates; strong $ is generally bearish for commodities. Sterling remains stable at 1.19 against euro but struggles to break 1.20.

China may need to import 4 mmt of wheat; this year they had poor domestic wheat and corn quality.

Southern Russia has experienced cold temperatures (up to -18), with only 2 cm of snow cover, some damage may have occurred. Russia normally does have some winterkill and any damage does not become apparent until the spring.

Debate continues about the size of UK malting crop. Malting premiums have benefitted from weaker sterling and poor French crop. Big discount of feed barley to wheat may deter some spring barley drilling as risk is perceived too big if quality specification is not achieved. English spring area forecast is up but Scottish crop down as lack availability of malting contracts; open autumn and better wheat prices encouraged wheat drilling.

author: Joe Beardshaw