May 2019 wheat futures again continue the slow upward trend this week, closing at £180.60/T. The wheat prices are the highest for two months, mainly due to concerns about:
the continuity of Russian exports till new crop and
quality concerns in Argentina due to rain.
Wheat touched a high of £200/T in August, followed by a recent low of £171/T, and a halfway average would be £186/T and raw material buyers are asking if this should be the level to expect for the rest of this year. The trend of the price of wheat this year is unlike any other in the past decade, so it is difficult to draw comparisons or make conclusions.
Brexit continues to dominate UK news; news of the deal and confusion amongst MPs has been causing large daily swings in currency value. This can make the timing of buying or selling ever more challenging. Sterling dropped 2 cents against $ on the news of the confidence vote in Theresa May, yet regained most of those losses the within hours of her winning the vote. This impact of the currency movement was a split in the UK wheat market with new crop becoming weaker whilst old crop remains firm despite the currency changes as old crop is stifled with a lack of farm sellers.
The USDA World Supply and Demand Estimates report was a little different to expectations with less change than is historically seen in the December figures. The USDA statistics seem to be more accurate for US domestic wheat, than they are for the Russian situation.
Russia has the cheapest wheat in the world still, and they have monopolised global wheat exports. Russia was predicted to be short of wheat this year, but they have been exporting more on a year-to-date basis than last year, having exported 20 Mln T so far compared to 15 Mln T last year. The USDA believes Russia will export 36.5 Mln T of wheat this harvest year (40 Mln T last year); if the USDA figures are correct, then Russia will export 13 Mln T wheat in 2019 and will have very little wheat left prior to its harvest in July/August. Many in the trade suspect that prior to the summer, Russia will run out of wheat to export, and at some point its recent adherence to phytosanitary rules is evidence that Russia is deliberately finding excuses to slow its export programme. The US is impatiently waiting in the wings to take over as global wheat supplier.
News that Egypt’s most recent tender was mainly of Russian origin rather than from the US also increased prices and concern on how long Russia can last before official restrictions are made to curtail Russian exports.
Donald Trump’s announcement of the first US soya purchased by China since the Trump-Xi truce bought fresh hope that at last progress was being made. Although the confirmed numbers seemed much below the ‘tremendous amounts’ stated by the president, the entire soya bean complex (beans, meal and oil on the CBOT market) closed higher, as the trade seemed to be reacting to the positive indications rather than waiting for evidence of a sustained change. Opinions were still mixed, with some stating the 30-40 cargoes reportedly bought by Chinese state companies was the start of big movements. Others believe that it showed that private companies in China were still out of the market for US beans for as long as the 25% tariff continues and that the relatively modest purchases are more of a goodwill indication to assist with the on-going trade negotiations. Add in the complication of the arrest of Chinese tech company Huawei CFO Meng Wanzhou over violating sanctions in Iran and subsequent £6m bail and it is clear that this trade dispute is not yet in the past, with both sides still willing to play its hand out to make its point. Either way, these hopeful steps were enough to support price rises that spread from the soya complex to cereals (especially maize) on the hopes that US export woes may at last be ending. This move somewhat slowed almost as fast as it began as so often is the case recently with CBOT soya bean prices closing down at the end of the week.
So the question of what will Russia do next is still to be answered in the wheat export market but this week something very unexpected happened in Russia. Russian state television reported from a youth technology forum showing off a high tech Robot called Boris which fascinated the reporter with its almost human dance moves which were seen as a leap forward in robotics’ ability, and an inspiration for Russian youth wanting a career in this field.
It later transpired that although ‘almost human’ dance moves are a leap forward for a robot as this was a man in a robot suit, so the description was less flattering.
The $3800 `Alyosha the robot’ costume made by Show Robots is equipped with microphone and tablet display certainly did a good job in its real purpose of a robot costume.With non-state media and social media leaping in to point out the error Russia-24 reportedly disappeared from the country’s YouTube channel for a short time.But we do not think that they should feel too bad.With Christmas just around the corner we are sure many young people around the world will now be inspired to ask for a robot… or maybe some (expensive) fancy dress outfits?
Brought to you by Paul Poornan, Melanie Blake and Martin Humphrey.