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Weekly Commodity Report w/e 26th October 2018

Following weeks where wheat trade in a relatively price narrow band this week saw UK Nov wheat move downwards to £170/T.


News of multiple wheat processing factory closures affecting the wheat supply and demand balance continued this week as like Vivergo just a couple of months ago, Ensus announced that it would shut down its bioethanol plant in the north of England due to unfavourable market conditions.  Consequently the UK LIFFE futures feed wheat price was driven lower for consecutive days this week, settling on Thursday at its lowest level since mid-September.  Brexit discussions added further volatility with 20 countries including Russia pushing to gain commercial advantage by attempting to block a fast track UK WTO deal for the terms of trade and tariff set on UK imports is clear evidence of the influence of Brexit on UK Agriculture trade.

Chicago wheat fell to six weeks lows due to a continued lack of export activity and strength in the $.  Both the Black sea and European markets saw tenders gained.  Both these regions also reported positive forecasts for rain and warm temperatures over the coming weeks to help winter wheat crops emerge and develop ahead of winter.  The Matif (French Milling Wheat Market) also followed the dip seen throughout the markets unable to take advantage of a relatively weak Euro.  Globally Asia has been active looking to secure long term wheat supply deals.  China signed a free trade agreement memorandum of understanding with Palestine as it continues to forge new alliances.  In 2017 trade volume between the two was up already up 16% over the previous year.

It is often the case that when a market moves one way all week, that Friday can be a position squaring day, and so it proved this week.  The market for the current wheat crop lifted by about £3 during the day, regaining most of the losses from earlier in the week.  Chicago also lifted on the Friday – it is too early to say if this a change of direction, or just position squaring, but it will be one to watch for the start of the next week.


The soya bean price in recent days has weakened.  The US continues to drive political disputes with the use of trade tariffs changing the world supply chain.  With Brazil the world’s largest soya exporter at about 75 Mln T (the US is in second place at 56 Mln T).  There could be trouble ahead, as Rio de Janeiro congressman Jair Bolsonaro is front-runner (58% of the vote) to win the current Presidential elections due to be concluded this weekend; if successful, Brazil will have its own version of Donald Trump.  He has advocated his preference for running the country as a military dictatorship, with every citizen armed, the withdrawal from the Paris Climate Agreement, abolition of the environmental ministry and expansion of agriculture and mining industries into the Amazonian biome.  He believes that the minorities should give way to the majorities, thus wants to exploit all the indigenous tribal territories.  How Brazilian agricultural commodities will be viewed by the global supply chain and consumers remains to be seen, but imminently and potentially there are huge ramifications.  Globally from Brexit, or the Brazilian presidential elections to the China/US trade disputes the effects of political change and volatile currency markets remains a huge influence on all agricultural commodities markets.

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People often say: It is never too late.  And that could be true for the iconic Sagrada Famillia basilica in Barcelona. 

The famous building by architect Antoni Gaudi is visited by an average of 12,000 people a day and has been under construction for 136 years.  Yet until now it has had no permit or official oversight from the local council or regional government.  The plot has been marked as an empty plot since 1995 according to Spanish newspaper El Pais and is not listed in the property registry despite the imposing stance the cathedral has on the landscape.  It has now been agreed authorities will be paid the small sum of €36m (£31m) 130 years late.  Perhaps even if it is never too late, its not better late than never!