Currency

Sterling briefly reached new recent highs this week against $ of 1.3425, before settling back down around 1.32. This is driven again by the challenges facing America currently, as a result of which the dollar posting its fifth consecutive month of losses. There were reports that the US economy could shrink by as much as 30% this year which triggered the Fed to announce that they will now target ‘an average 2% inflation rate’, whereas historically they have always targeted a fixed 2%, effectively admitting they realise inflation will increase. Against the €, sterling is at a 12 month high ahead of the European Central Bank meeting next week despite the potential breakdown in Brexit negotiations.

Wheat

US prices continued to move higher this week with the reduction in corn numbers, however, this comes at the same time as the Grains Council raised the global wheat forecast by 1 MlnT up to 763 MlnT. Australian, Canadian and Russian crops continue to offset the reduction in the UK and Europe. Russian prices are beginning to increase now to encourage farm sales although this is proving difficult.

The UK price premium is still being largely driven by a sporadic North/South divide harvest however, there is a large import programme scheduled into UK ports pre Christmas in order to avoid the January tariffs and this will begin to weigh on those values. British millers have made large purchases of German milling wheat to offset the lower quality UK crop, however this will mean that any wheat parcels which do not meet spec, will be downgraded to feed wheat of which the UK are also importing from Holland.

Prices are beginning to feel like they are reaching their limit and that there is a correction due. As there is plenty of barley available, and there will also be the added pressure from maize imports which will be available from next month.

Soya

Soya prices have rallied again this week as it becomes apparent that the rains from Hurricane Laura last week will not reach critically dry areas in Nebraska and Iowa. The market is now mindful that the weather just seems to have turned at the wrong time after a near perfect growing season so far. The USDA have revised their figures down to 66% good/excellent however, but it is important to remember that this still makes this year’s crop the third largest on record.

In South America the crush margins are good, which means there is healthy meal stock which will need to be sold and an improved spread between the official and unofficial peso rate will encourage sales, and may mean that China has to switch some of its tonnage. It still feels like the real low prices for this years crops have gone, but that does not mean that there will not be opportunities to buy as currency allows.

And Finally…
US veteran’s unearthed scrap book reveals secret photographs of Japanese officer handing over his sword during WWII surrender ceremony.

Dave Reyes unearthed his father’s scrap book and published them this week. His father was a US Navy sailor on a destroyer which formed part of the USS Missouri battleship group during the war. He had taken the photos despite the ban.

The ceremony took place on 11th September 1945, 9 days after Japan formally surrendered to the allies. There are three photos in total, one shows the Japanese arriving by boat in Australia, the second shows the officer signing the surrender paper, and the third then shows him handing over his sword. There were representatives from most allied countries present at the ceremony, and this included selected members of the serving personnel as well as government officials, which is how Dave’s father came to be there.