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Weekly Commodity Report w/e 19th October 2018

UK wheat futures moved a little lower over the last two weeks.  The November UK wheat futures finished trading on Friday close to £176/T.


The recent USDA report left the world wheat export figure unchanged, but the impact was less than previous reports.  The AHDB reported a drop in the average UK wheat yield down from 8.3T/ha to 7.8T/ha.  UK consumers remain scarce in the market but sellers are also holding back.  The European and UK wheat market price was supported with weaker currency markets relative to the $, making both relatively expensive in global terms. 

News of the Rank Hovis flour mill in Southampton will close could create availability of lower quality milling wheat in the south.  The global futures markets suggest some price support, but in the UK, the uncertainty is increasing as the Brexit discussions continue – and for as long as there is uncertainty, then volatility is likely. 

The Chicago market saw mostly sideways movement this week as continued progress in Russian exports supported the price but reduces demand for US grain.  It is reported that the Russian agricultural minister raised the estimate for the 2018 wheat crop by 1 Mln T to 106 Mln T.  Although this is down on last year, it is above the 10 year average and represents an increase in available exports to over the 30 Mln T.  This reduced fears that Russia will curb exports for now, backed up by the Russian Ag Min which proposed to resume the subsidised rail tariff for grain for export from remote areas in 2019.  However, many believe that the rate of Russian exports is unsustainable, which so far this season stand at 13.8 Mln T - up 41% from last year.  It is anticipated that demand will shift to the US and other exporters for the later part of the season.   The USDA report reduced global wheat production by 2.1 Mln T to 730 Mln T, and world wheat end stocks down 1 Mln T from the September report at 260 Mln T. 


The price of soya beans rebounded from contract lows in September as it was reported the US and China were again discussing a trade deal.  The Soya bean price may also have been supported by the slowing US harvest and continued demand globally for soya bean meal, although US exports are running well behind recent years.  The cancellation of 300KT of soya bean sales to China/Unknown and continuing good harvest weather are limiting the price upside.  It is thought that US Soya bean price will recover with the offset of trade to non-China business and a season where sales pace is less front loaded (early part of the season) than in the past, allowing less frenetic trading over the entire season. 

Currently there appears to be no solutions in the China/US trade war so it is no surprise that Chinese soya bean futures were seen to climb more than 2.5% to a record 3,457 Yuan per tonne last week, marking the biggest daily gain on an actively traded contract on the Dalian Commodity Exchange since June. 

After a hard day’s work a good night’s sleep is very important.  Well it turns out the answer may not be the chicken or the egg but sheep.   Studies found that wearing wool helped both students in there 20’s and adults aged 65-70 both fall asleep faster, and sleep longer compared to cotton and polyester  – indicating a better quality sleep.  Researchers from the University of Sydney believe that wool is better at regulating body temperature, keeping you in what is called the thermal comfort zone.  Makes sense to us as sheep have to wear the wool all the time!


But if you do not have any wool nightwear handy tonight perhaps you can at least try good old fashioned counting sheep.