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Weekly Commodity Report 7th December 2018

The May 2019 wheat futures are slowly trending upwards this week, reaching £176.50. Trade is still slow and interest from farm sellers is low. There is no big news in the cereals market and everyone seems to be waiting (still) for final news on the Brexit deal.


Sterling is weak which contributes to the firmer tone in the wheat market. The AHDB reported an expected 4% increase in planted wheat acreage for the 2019 season, encouraged by favourable weather, higher cereal prices and with the availability in the 2018-19 season remaining tight. The same report also recorded the highest volumes of animal feed produced in the UK between July and October since records began, up 4% to 4.6 Mln T, no doubt encouraging wheat production. The growth in animal feed production was attributed to the increased summer tonnage for ruminants and continuing rises in poultry placings.

The European trade is also free of any significant new market drivers, so it is range bound, with the focus remaining on Russia and politics to provide some momentum and interest. Russia’s predicted expected exportable stock limit draws ever closer, perhaps within a month, even after the slightly slower export pace set by the increased quality checks. The US still hopes to step into Russia’s place to gain export opportunities.

There were gains in the US wheat market from news that the G-20 meeting indicated positive steps between China and the US, but that was all undone on the news that the CFO of Chinese telecoms company Huawei had been arrested in Canada on orders of the US for alleged sanctions violations in Iran. The news came just two days after Presidents Donald Trump and Xi Jinping agreed a 90 day truce in the trade war that has dominated this year. Delays in the US export figures added to resistance.


The effects of the US/China disputes continues in the soya bean markets with prices under pressure despite an overall increase this week which ended on a recent high. It is felt that despite the truce, the commercial buyers in China are unlikely to rush forward to buy US imports while the 25% tariff remains, when it could be removed soon. Argentina has indicated that they could export 14 Mln T of soya beans in the 2019/20 (only 3.4 Mln T in 2017/18) indicating that they believe the effect of this political spat will continue. Brazil also looks like it intends to continue benefiting with its soya bean production figures increased to 121.4 Mln T, which is a record level despite some analysts citing more optimistic figures; even as high as as 130 Mln T for next year.

UK statistics show that divorce rates double over Christmas, but it would appear that the UK is not alone in this not so festive tradition. The US and China (Christmas??), UK and Europe, Russia and Ukraine also suffer the same fate. And just like in any relationship breakdown in all these everyone else has an opinion and a side.

This week a Russian boat was photographed under the bridge over the Kerch Strait between the black sea and the Sea of Azov blocking Ukrainian exports symbolizing the attitude of so many of these disputes.

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With relationships, counselors often advise you do something special together when times are hard. With Brexit on the horizon what activities have forged bonds between unlikely countries? The answers include space travel, science and aid. For years unlikely partnerships have been formed to enable advances in these activities. It is easy to see that whatever the political differences, some things can be made easier, faster, more cost effective and more fun will help resolve the differences. For example; the International Space Center has a complex set of legal political and financial agreements between 15 nations all with different roles and rights. From US and Japan, Canada and Italy to Russia and the UK we all do our bit and it has been continuously manned since 2nd November 2000 when expedition 1 began. It continues to succeed and there is a live stream - so take a look.

You will notice below that there are now three names contributing to our weekly report; Paul and Martin have been joined by Melanie Blake.

Melanie is our Risk Management Director, and has been on the team for nearly 18 months and buying commodities with Paul for much of the time. Amongst her wide range of responsibilities, she is now responsible for collating the report you see here.

Brought to you by Paul Poornan, Melanie Blake and Martin Humphrey