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Weekly Commodity Report w/e 28th September 2018

UK November wheat futures finished the week at £176/T almost the same as the previous week. Global cereals are affected by uncertainty, especially the Russian export market in relation to their wheat export plans. During the week, the AHDB reported that UK wheat end stocks will hit a 4 year low. The end of season wheat balance sheet will be relatively tight at 1.718 Mln T (37% decline year on year) due to a smaller crop size than the last two years. As well as the smaller crop, this year has also seen an increased feed usage of wheat as a result of the summer drought, but on the other side of the equation, the closure of Vivergo wheat supply should release grain, but the relatively tight S&D will support prices in the longer term. As further reports are expected from the US, much of the grain trading world is waiting before reacting. UK consumers remain well covered with demand low. The recovery of both the £ and € against the $ is adding further pressure to local markets.


In the global wheat market Russia has been high on the news agenda with expectation that the 2018 harvest will 26% smaller than the record breaking 2017 harvest, and when added to concerns that are their current high rate of export will reduce significantly following new tactics from Russian authorities, including higher quality testing, which could be the first steps to slow the speed of exports. The recent rate of Russian exports has pushed wheat prices down 3%, whilst Chicago wheat futures have taken the biggest hit, which might have been made by Trump’s tariffs. Weakness in wheat has had a knock on effect on the maize markets. Currently the Russian Agriculture Minister remains adamant that there is no reason to introduce wheat export duties and other regulatory restrictions seen previously – but then he would say that. 


Soya meal prices were again little changed, with Soya bean prices saw a drop mid-week followed by smaller gains still finishing the week down on last week. A drop in the 2018 South America soybean supplies could help provide price support in the short term. Long term, record US soybean supplies and talk of large 2019 South America soybean crops could weigh on soybean prices, despite US/China complications as there is record World demand. The most recent USDA report slightly lowered the assessment of the US soya bean crop from 66% good to excellent to 65%. It is expected that Brazil will plant 89.6 Mln acres of soya beans for the 2018/19 season – a record breaking acreage (up 3.2%), due to the confidence created from the (tariff induced) expansion of demand from China following the extended trade war with the US. S American soya is trading at ae premium to US soya, as it is the preferred source of choice, and as a result their domestic soya prices are up more than 30% compared to last year. 

Something explosive this week!

A Tokyo Lab turned on the world’s strongest magnet and Sparks flew. The magnet generated one of the most intense magnetic fields ever generated on Earth reaching a strength of 1,200 teslas before exploding and blowing the doors off its containment room. The team pumped energy into a small electromagnetic coil which collapsed in on its self at Mach 15 (more than 3 miles a second), squeezing the magnetic field into a tighter and tighter space before destroying itself in an explosive way. It is hoped that these experiments will teach us more about electrons but that is not going to happen until they can rebuild the coil and build some stronger doors.

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