The UK grain trade has experienced a, to put it politely, ‘extremely unusual’ week following the announcement that Donald Trump will be the next US President on Wednesday morning. The news shocked both the world and the global commodity markets, the UK grain market included.
Initially, the dollar plummeted against other major currencies but has since recovered.
As for the pound, sterling has strengthened by more than 5% over the last week or so which has persuaded the UK wheat market downwards as the ex-farm value of UK wheat becomes increasingly uncompetitive against a European alternative.
Feed wheat for spot collection is currently valued in the region of £136/T ex-farm which, given the current value of the pound, seems reasonable. Many farm-sellers appear to be holding out for the return of £140/T ex-farm for collection Pre-Christmas after failing to secure movement when the value was offered a fortnight ago.
Whilst £140/T ex-farm could easily be achieved, it is just as likely that ex-farm values could retreat to £130/T ex-farm; for those of you that require movement pre-Christmas, is it worth losing out for the sake of £4/T?
This month’s World Agricultural Supply and Demand Estimates from the US Department of Agriculture (USDA) landed on our desks on Wednesday and thankfully, given the events which unravelled earlier that day, the latest report brought little change to last month’s figures.
Global wheat production for the current 2016/2017 trading season remains forecast in the region of 744 million tonnes. For comparison, 735 million tonnes was produced globally in the previous trading season (2015/16).
Also, it is interesting to note that the USDA have made no changes to Australia’s forecast wheat production figure despite the recent weather issues.
Forecast wheat exports for the European Union this season are also unchanged despite the ongoing ‘Brexit’ concerns.
Meanwhile, UK OSR values have also endured a ‘rollercoaster ride’ this week as the US election and USDA have both impacted prices significantly. Current spot ex-farm values have now slipped below the £340/T ex-farm – a £15/T discount from the highs seen a fortnight ago.
Plantings of the 2016/2017 Brazilian soybean crop was 55% complete at the start of the month, slightly ahead of average.
Last season, dry conditions across some key growing states of Brazil delayed plantings of soybeans, as well as having a knock on effect on final output.
This season, conditions have been ‘largely favourable’ thought Brazil. Long term forecasts are also good with plentiful rainfall and mild conditions.