Currencies

The £ has had a good week, rallying against both the $ and the € after hitting 7 week lows, which triggered a large buy in.

The issue is that in order to sustain this, the market will need to see economic growth, yet July’s GDP figures were static and with the furlough scheme due to end this month, there will be uncertainty.

Wheat

Last week wheat had been on a continued downward trend, largely driven by profit taking with contracts reaching new highs and in anticipation of the September USDA report, with Matif down €7 and Liffe down £7 in the week.

The report was seen as bearish, although the market did not seem to react to the news and opened flat. Global wheat end stocks and production were increased by circa 7 Mln T, offset by an increase in usage, meant an overall increase in stocks by circa 4 Mln T.

This week the market has rallied, bouncing off technical signals and triggering a wave of buying. This market remains volatile with big swings and it likely to remain this way for some time yet.

Looking at the UK, the wheat harvest is all but done and early indications would suggest we have reached somewhere near the 15 Mln T but quality will be the issue, and until UK flour millers have decided on their spec levels, and the market is able to take stock on exactly what is available, prices will remain difficult to predict.

Barley has now begun to fall out of favour with feed manufacturers with the discount to wheat narrowing down to under £10 per tonne, which is uncompetitive to feature in diets, which in turn will put more pressure on the wheat. When this information is combined with the introduction of E10 fuels means that the long term view for this season is unfortunately still bullish to wheat.

Soya

Soya had a mixed USDA report, with acreage reduced but projected yields increased. The report triggered a wave of fund buying which suggests a long term bullish view.

Data from China suggest that hog numbers will be reduced by 5% in 2022 which longer term, more for the summer South American crop, could mean lower prices.

Organic Markets

The organic markets for this coming winter continue to move up at an alarming rate. Organic cereals across Europe and the Baltic region are in tight supply, and there has been a portion which has been sold as conventional because in some markets the organic premium is still too low! When this is coupled with the ongoing logistics challenges across Europe, and container logistics across the world, this has combined to see grain move up circa £40 per tonne in the space of a month.

Proteins remain an even bigger area for concern, with the supply chain unsure if they will be able to secure the container freight to supply Europe from homes such as China and India. There are still questions over India’s crop and if they will even actively be able to come to the market to sell which would see the UK switch their reliance to Chinese material, something which has not been the case before and comes with its own uncertainties.

The mix of uncertainty over volumes and ongoing freight issues have seen soya move up to well over £900 per tonne for new crop (the price was less than £700 a year ago!).

And Finally…
Only in America…. Falling cat caught at NFL game by spectators in an American flag.

This cat most certainly used one of its lives this week when it clung onto the edge of the stadium roof before finally falling only to be caught by fans using an American flag. In true American fashion, fans went wild after the drama had unfolded!

Regards,
Kay Johnson & Martin Humphrey