Currencies
The graph above shows that Sterling brutally crashed through the previous low of £1:$1.1 set in 1985 following the announcement of the `mini-budget’ on Friday - a sure pronouncement that the international financial community is not convinced that Liz Truss’ approach to the UK’s economics will not work (fast enough).
Somewhat strangely, against the Euro, Sterling is above the all time low set after the Brexit vote. The Bank of England admitted this week that the country was now in a recession, at the same time as raising interest rates by a further 0.5%, now to 2.5%.
Wheat
This week has very much been a week of 2 halves where we have seen a trading range of £20 in 2 days on wheat futures!
Following the bank holiday on Monday where UK markets were closed, we opened on Tuesday lower following both the US and EU markets, largely on the back of Russian crop revisions.
We were however still in the situation with conflicting fundamentals which meant there was a limit to the downside, back within that long range of £260-270. With the corn and rice story not looking likely to improve and corn still holding that £40 premium over wheat, it would make little sense for wheat to fall lower and long term, still suggested a bullish outlook.
Since then however, we have seen the announcement by Russia of their intention to conscript 300,000 troops with immediate effect which then throw doubt over the viability of the grain corridor. This pushed wheat up £20 in the first 24 hours, which has now settled back down £15 over Tuesdays open. This is a stark reminder that volatility is not going away, and the markets still feel very much like taking a 50/50 chance which makes trading or making any long term decisions speculative.
Soya
Soya has firmed this week after initially opening lower, driven by Chinese purchases. The rumour seems to be that China have purchased circa 4 MlnT in the past 2 weeks. Unfortunately for the UK, buying in sterling, prices have firmed further with the hit on currency mentioned above.
Sunflower prices have turned and firmed slightly due to the uncertainty over the situation in Ukraine, however, compared to rapemeal and Palm Kernal for ruminant diets this winter, they are still by far the best value which would support higher prices going into the winter.
Organic
Organic cereal offers are beginning to come more freely which is finally giving the market a truer value. We have seen around a £20 per tonne drop from first offers back in July time although again, there are concerns over the stability of supply from some Black Sea areas so we would view this dip as an opportunity!
Proteins, both sunflower and soya crops are looking good and at the moment, supply seems more than adequate. There are still rumblings of issue with some Indian certification bodies but these do not seem to be impacting price at the moment because of the levels of stock being held across the UK and Europe.
And Finally…
Vintage Chocolate?
Fine wines mature with age, although my palate cannot appreciate the difference! Does chocolate improve with age, and if so, what is it worth?
During the Boer War, Queen Victoria thought her troops in South Africa could do with a treat, and the solution was a box of chocolate!
Someone in Lincolnshire found a box of Rowntrees chocolate made in 1899, and sent the box to auction. The guide price was for between £100 and 200, yet it sold for £519 including auctioneer’s fees!
What would you pay for chocolate that was 123 years old? Having `experienced’ Compo Ration Chocolate (army issue) I would not have given a fiver!
Regards,
Kay Johnson & Martin Humphrey
