February 21st

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. £1 down yesterday as grain markets generally had a negative day.
UK old crop wheat is seeing little trade, there is no margin to export and domestic buyers are taking a low profile which maybe just as well with few farmer sellers.
Supply / demand situation does feel tight, further tonnage may not come to market until Feb sale contracts / pool commitments are completed; cash flow pressure not apparent.

With plentiful global wheat stocks and no real weather threats, sentiment on new crop is nervous / bearish. French wheat rated 92% good to excellent, and limited winterkill reported in Europe. Ukraine is the only area of concern, thick snow could cause snow mould if it does not melt and north eastern Europe (Germany – Finland) could benefit from some rain.

US markets were closed yesterday for presidents day, but markets were down Friday as funds reduced positions; US wheat too expensive in export markets and soya fell on big south American production. USDA outlook conference Thursday and Friday this week will indicate US planting intentions; how much corn land will be switched to soya as high oilseed prices attract growers.

Mexico may try to look to south America for wheat, corn and beef in response to Trump’s actions, but this maybe not be practical due to increased freight costs.

Virulent bird flu in China will see poultry production reduce, meaning less feed demand; bird flu may reduce soya meal demand 1-2 mmt.

The present strength of the UK economy may give chancellor Hammond some wriggle room, avoiding tax increase or service cuts in March budget.

In some areas of Russia, land prices have increased by 60% over the past two years, however Stockholm listed Black Earth had pulled out of Russia; Black Earth at one stage was responsible for 330,000 hectares. Western investors in Russian land have been replaced by middle and far east investment combined with domestic buyers; Russia now rank top wheat exporter.

UK single malt whisky export sales topped £1 billion for first time, total Scotch whisky sales of £4 billion have benefitted from weaker sterling (93% whisky exported).

author: Joe Beardshaw