Currencies
The £ has dropped against last weeks 6 months highs against the $, partly down to short term profit taking and also down to the Bank of England’s decision to not raise interest rates for the time being.
This week has also seen the well publicised COP summit in Glasgow which the trade seem unsure how to take. Will the summit produce realistic, actionable aims or will this be more of a box ticking exercise?
Wheat
The wheat markets continue on their strong bullish runs, albeit taking a breath on Wednesday for a short period. We are now looking at figures higher than the previous record contract highs from the very wet 2012 season.
Russian wheat is still competitive into export markets, despite the rise in export taxes. This will mean the Russian government will either look to increase taxes further or push for an export ban, like we saw in 2012.
Looking at the UK, wheat is still competitive into European markets which does not make sense given our balance sheets would suggest we will likely be net importers towards the end of the season. Technically, prices are now looking like they could push towards £236 on the May futures, a particularly frightening thought.
Egypt, after cancelling cargoes in favour of maize last week, has been back buying in those November and December parcels. It would appear that the harvest pressure in the maize market is very much over, with ethanol demand in the states now back to pre pandemic levels. Export commitments for US corn are now at record highs, combined with fears of a dry La Nina weather pattern in Argentina. China continue however to place large orders for US material.
Soya
Soya prices seem to be about the only bearish market in the trade! A good US harvest and boost for stock levels have helped keep the bearish trend.
Looking ahead, with Brazil’s anticipated volumes for this coming season, it would mean the US and Brazilian material available is 10 MlnT more than it was last year.
Exports so far for the US are in line with expectations so all data at the moment is suggesting a healthy carryover.
Organic Markets
Organic grain markets continue their impossible rise upwards as we look further ahead into the season, 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…
Bonfire night traditions to try!
Bonfire night has long been a loud and colourful celebration of the foiling of the Gunpowder plot in which Guy Fawkes and his followers attempted to assassinate King James I by blowing up the Houses of Parliament. But how many traditions have been forgotten?
1. Penny for the Guy (scarecrow versions of Guy Fawkes are burnt on the bonfire)
2. Colourful fireworks and sparklers (with silent versions also now available!)
3. Bonfires (but mind the hedgehogs!)
4. Parkin Cake (a warm, ginger cake from the North of England).
5. Toffee apples (for those who don’t value their teeth!).
Regards,
Kay Johnson & Martin Humphrey
