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May 17 (16 crop) London wheat closed up £1.10 yesterday, Nov 17 (17 crop) up 30p, May 17 is £1.95 presently at a premium to May 18.
European commission says mild weather in EU and eastern Europe has meant crops have not ‘hardened’ off and increases danger of winterkill with colder weather forecast for Russia and Ukraine, especially with little snow cover. The situation was the same last year but damage was limited by lack of sustained cold weather.
US markets were down yesterday, especially soya which finally responded to big South American crops / supplies; rain has benefitted production potential. Fundamentals are negative, there is a bearish sentiment, although 50% of US hard wheat belt may have been damaged by cold conditions.
Investors have taken biggest long position in oil markets since July 2014, this has been as a result of Oil producers both (Opec and non Opec producers) cutting supply by 2 million barrels day.
Some analysts feel sterling is overvalued and maybe due a fall as Brexit situation develops; many EU countries are having elections in 2017 and may take a hard stance to negotiations. Low UK interest rates may provoke an even greater spending spree over Christmas, boosting UK economy but the repercussions may come later.
Interest rates and politics will continue to influence currency added to which recent events in Berlin, Turkey and Italian bank situation.author: Joe Beardshaw