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London wheat closed up c. £1.50 yesterday, weather and politics were the main influence.
UK old crop wheat has lost momentum as meagre demand has not been helped by imports; old crop premium to new crop may erode.
Rain and present warm weather will see crops quickly progress; the rain has alleviated concerns but yield may have already been lost and further rain will be required.
Europe has also had beneficial rain but recent forecasts have seen production downgraded, Strategie grains reduced EU grain production by 3.6 million tonnes to 301.6 mmt, however this is still up 4.5 mmt compared to last year. MARS, the EU monitoring service, also reduced production in western Europe due to dry conditions, especially Spain. Spain’s barley yield is estimated 2.5 t/h, down .46 t/h from previous estimate and down 30% year on year.
French wheat rated 75% good (this time last year 85%) winter barley 78% (93%), spring barley 67% (84%). However last year French crop problems started in June with heavy rain and a lack sunshine.
EU barley production will be down and the differential to wheat reduced, especially with news that Saudi has bought 1.5 million tonnes for July – August arrival, origin not specified.
US markets have risen as continued weather prevents corn drilling and the planting deadline is soon approaching. Funds are short and if they try to reduce positions it is another bullish factor. Egypt buys US wheat (295,000tonnes), first time for 2 years undercutting Russian and Ukraine supplies.
Trump continues to make headlines. he declared US would pull out of trans –pacific trade agreement. The other 11 members say they will continue if necessary without US.
Sterling falls and the ‘experts’ have changed their opinions, they think sterling is overvalued.author: Joe Beardshaw