UK wheat supplies are still tight with the North/South price divide still in place at £162/£152 respectively, because the industrial users in the north (Manchester & Hull) chew through wheat at a rate of knots.

There is also an East/West divide at £152/£157 respectively, as it is always difficult for consumers in the South West to find wheat at the end of the season. Consequently there are reports of 12,000t of sustainable French wheat en route to Ensus at Teeside, and 4000t en route to Teignmouth.  These shipments appear to have slightly eased the physical market in terms of supply and price. November wheat prices are trading at about £141/t.

There are a few holidays next week - US Memorial Day and our Bank holiday Monday (CBOT and LIFFE closed), so a quiet week is expected (famous last words?).

Last week we reported that soya prices fell sharply because of shenanigans in Brazil. More information has come to light. It appears that President Temer was secretly recorded instructing an executive from the JBS meat-packing company to keep paying the ‘hush money’ to the former House Speaker Cunha who is in jail serving a 15-year sentence. Cunha was convicted of taking bribes and money laundering as a result of Operation 'Car Wash' - a Police investigation into a money laundering and a $2bn Petrobas bribery operation. This growing investigation now links money laundering, bribery and the recent Brazilian meat scandal. Temer is trying to prevent Prosecutor General Janot investigating him; maybe he will take a leaf out of President Trump’s book?

Brazilian farmers are concerned that the financial and political chaos will delay important new legislation concerning pesticides, new crop varieties, the reduction of rural taxes, guaranteed minimum grain prices, and the farm loans programme for next season. Thus the Real is still devalued and the downward pressure on soya prices is still in place.

Soya bean meal is about $305/short ton, the lowest price since October last year. GM Soya is about £290/t delivered to the mill, Non-GM is about £425/t delivered to the mill. About 96% of all Brazilian soya is GM, and the last bastion of NonGM is the state of Mato Grosso where about 10-15% of the soya is NonGM and where farmers are paid a premium of about $64/t towards the cost of segregation. In the apolitical world, the US is expected to produce 116mt soya this year, Brazil a record 111mt (15mt more than last year), Argentina 57mt, China 13mt, India 12mt, Paraguay 9mt, and Canada 8mt. China will produce about 1mt more soya this year than last, due to 400,000 more hectares being planted as a result of China trying to reduce its maize stockpile, by persuading its farmers to plant soya instead of maize. [Bang goes my attempt to leave politics out of this paragraph].

Overall, the USDA calculates global soya production at 345mt. Soya usage and exports are expected to increase, and the USDA is also forecasting a smaller harvest next year, so the apparently large crop is not expected to weigh on prices. Global exports are expected to hit 150mt (5mt more than last year), with growing imports from China, Egypt, Vietnam, and the EU.

Moodys downgraded China investor ratings by one level to A1, the first downgrade in more than 25 years; this will increase the interest rates at which China borrows money. China’s debt as a % of GDP is about 260%, whilst for comparative purposes Japan is 235%, Greece is 180%, UK 92%, Germany 69% and Saudi Arabia is 31%.

This is the 1908 London Tube map – the Spaghetti line? Harry Beck (1902-1974) was an engineering draftsman who had the idea of creating the present form of the London Tube map, drawn like an electric circuit diagram unconstrained by geography.

The un-commissioned map was met with scepticism and turned down in 1931, but after presenting it for a second time the authorities reluctantly trialled it as a pamphlet in 1933.

Demand for the new map outstripped supply, and as a concept, has been used ever since.

Regards,

Paul Poornan & Martin Humphrey