Currencies

The £ has continued to move lower against both the $ and € now that the likelihood of the UK triggering Article 16 of Brexit (or the Northern Ireland protocol), seems a very real possibility and if we did, then the EU are likely to be looking for a way to retaliate.

Wheat

The wheat market has re found the strength following on from the USDA report and continued its upwards trend, breaking that key resistance level on May future of £230. The market will now be testing to make sure it can sustain those prices and if it can, the next potential resistance level is £236!

Looking at Australia, they are one of the few countries reporting a rise in their production figures, estimating 32.6 MlnT, which is only beaten by last years record harvest of 33.3 MlnT. The concern now is whether there will be sufficient farm labour to get the harvest in and also around quality with the wet weather currently being experienced.

Russian export pace is still showing little signs of slowing which could mean that we see an export tax close to $100 per tonne or an early export cap. The market needs around 36 MlnT of Russian wheat but last season the cap was at 31.6 MlnT. EU exports have finally shown signs of slowing but it is the high price which is allowing that so it makes no sense for that to move lower, or we would end up in the same situation.

Soya

There has been big buy ins to soya this week from fund money, triggered by the ever growing fears around inflation in the US. China has felt light on their buying and this has proven true with some large contracts sold to China in the last 24 hours.

The long term view for soya is still bearish with the anticipated South American figures which would mean over all global production would be up 5-10 MlnT on last year.

Organic Markets

Organic grain markets continue to maintain their high prices, largely driven by shippers unable to book forward freight and therefore, unable to cost this into prices. Current indications on container raw materials is that circa $350 for every tonne is to cover freight costs, whereas in a normal market you would be looking somewhere closer to $50.

 In terms of physical raw materials, grain offers are tight and it is hard to gauge what there is still to sell at origin because the continuing rising prices is not encouraging offers. For proteins we now have the concern about the Indian organic boards at risk of being decertified. This may well impact material which is either already in transit to the UK or even already in UK stores. If this does go through, it could significantly short the market in the nearby.

And Finally…

Iceland launch their ‘turkey insurance’ this Christmas!

With stories around shortages over the Christmas period on several festive treats, Iceland has announced this week that they will be offering a turkey insurance scheme which guarantees that every customer who signs up to it will receive a turkey for Christmas.

 The scheme means the first 150,000 customers who sign up to their delivery slots between 17th and 22nd December will be guaranteed to receive their turkey, out of the possible 600,000 delivery slots available. Their promise includes a clause that if they fail on this, then they will cover the cost of the entire shop as it is delivered.

Regards,
Kay Johnson & Martin Humphrey