UK May wheat futures briefly touched £142/T this week and ended the week at £142.75, if one perceives 22 lots traded by 3pm on Friday as ‘trading’.  Generally, UK wheat is in supply and demand balance and trading within a narrow price band.

The 78% drop in exports in the first quarter compared to last year means we are not over-exporting, but exports are now taking place from the South of England (the North being too expensive).  Famers appear to be reluctant sellers as they indulge in their seasonal hobbies.  The grain trade report that they have very little on their books for the New Year. 

US trading has been mixed this week due to Thanksgiving and a stronger $ pushed wheat prices lower in the CBOT and Matif exchanges.  US winter wheat plantings are expected to continue their decline over the past four years and the ‘all wheat’ acreage is estimated to be 45.7 Mln acres this winter, the lowest since records began in 1919.  The funds are almost 15mt short (sold) of wheat, indicating that they expect prices to go lower, and the CBOT March contract is already $4.4/bushel - a couple of cents above the contract low.  So there appears to be limited logic in the US wheat markets other than exports are 7% lower than last year.  US and Global wheat supply remains in excess of demand.  China continues to add to global wheat liquidity by auctioning 260,000t of wheat from state reserves at an average price of 2,504 yuan ($377.40) per ton.

A cloud of Ruthenium-106, a radioactive metal, was recently detected across 28 European countries between 27 September and 13 October, at trace levels.  Weather reports indicate that the origin was near the Ural Mountains, but Russia pleads ignorance and there are no nuclear reactors in Kazakhstan.  One theory is that because only Ruthenium has been detected (and no other isotopes), this is not considered to be a nuclear incident, indicating that the residue may have come from a satellite where ruthenium is used for propulsion.  Although the levels detected are 1000x more than background, the levels are not considered to be high enough to create human or environmental risk.  As Russia has harvested about 138 Mln T grain to date, potential recipients of nuclear-contaminated grain, no matter how low the level, are in near panic-mode.

The US soya harvest is about 96% complete which has had little effect on prices.  Next year’s Brazilian soya crop is estimated at 107Mln T (114 Mln T this year) and conditions are said to be improving.  Soya bean meal is currently $327/short ton, or £300/T delivered to the mill, compared to the recent low of £285/T on the same basis in mid-August.  The IGC believes the world will produce 348 Mln T soya beans (351mt last year) and that consumption will be 352 Mln T.   There have been widespread complaints in the US that a particular herbicide that has been registered since 1967, is responsible for damaging millions of acres of US soya.  The manufacturers deny the accusation.  The US soya acreage grew 7% this year compared with the 9% reduction in wheat.  The US maize harvest is 90% complete (83% a week ago) with yields at all-time record, thus global supplies of maize will not be shrinking soon.  The IGC believe that the world will produce a record 1040 Mln T next year, in agreement with the USDA. 

Brexit.  Budget.  Politicians – English, French & German.  We do not understand currency, nor how it is affected by the three enigmas mentioned at the start of this paragraph, but generally Sterling appears to be gaining strength against the US$, and wagging its tail in a figure-of-eight against the Euro. 

Ever since Paul took the ‘fast lift’ to the rotating restaurant at the top of the 40-storey Mandarin Hotel in Singapore, he has been wary of heights.  Ready to step out of the lift, and realising that there was nothing but a quarter inch of steel floor between him and the ground 150m below.  So imagine how this poor Japanese lady felt when she stepped into this fake lift.  No doubt relieved to be alive.