Currencies

The £ found more strength this week and broke the 1.37 level to reach 1.38, the highest level since 2018.  This was partly from the continued strength gained from the vaccine roll out but also from some slightly weak US economic data following the initial buzz around Biden’s inauguration.  Against the €, we seem to be consistently hovering around the 1.14 mark now. 

Wheat

Global markets were quiet, heading into the USDA report on Tuesday evening.  The important monthly report lowered wheat end stocks by 9 MlnT, this had been expected by the market so resulted in a sell off towards the back end of the week. 

Russia announced this week that they have signed off their ‘floating’ tax for new crop although it is unclear exactly what this means so for now, appears to be slowing sales from that region. 

China began buying wheat parcels from Australia ahead of their New Year shutdown which may now ease the pressure on the EU stocks for the rest of old crop.

UK prices were down £3 on the week following other markets but also benefiting from the improved currency.  AHDB reported this week a 19% reduction in demand from the flour milling sector compared to this time last year which again would support the point that we may not need the 1 MlnT of imports through the August as had previously been talked about although we will still need some. 

Soya

Soya began the week moving higher in anticipation of a bullish USDA report, but when that report supported the trade’s estimates, there was a sell off from fund holders ahead of the US long bank holiday weekend.  US end stocks for soya are now 77% lower than last year so the crop development in Argentina and the Brazilian yields will be key now to give the market direction in the coming weeks.  The weather has turned dry again and soil moisture remains below average. 

China are now closed for their New Year celebrations but they had been heavily reducing their bean stocks prior to the shut down by upping production.Again, if they decide to replenish these stocks on their return, this will also lend support to the market.

And Finally…
Meme based currency Dogecoin rallies 16% after Elon Musk tweets he bought some for his 9 month old son.

It has been a busy week for Tesla and Elon Musk in terms of cryptocurrencies.  Firstly he tweeted to his 46 million followers that Tesla had purchased $1.5 million worth of Bitcoin which resulted in a 20% surge in the cryptocurrency, but he has also tweeted that he has taken a position in Dogecoin.

Dogecoin, which was started as a joke in 2013, is now worth $10 billion.  Unlike bitcoin, there is no supply limit and currently have around 100 million coins are on the market with 5 million being introduced each year. 

Musk tweeted that he bought the currency for 9 month old ‘lil X’ (or to give him his full name X Æ A-12 Musk – so catchy), so that he could be a ‘toddler hodler’ (a slang term for someone who holds a position in cryptocurrency)… to have a parent who can set you up with that kind of `play’ fund!

Regards,
Kay Johnson & Martin Humphrey