UK wheat prices showed a small bounce earlier in the week but have returned to the gentle downward trend, with the May wheat hitting contract lows of £137.50 and finished the week just above that level.
The market continues to be driven by currency and political uncertainty due to both continuing EU discussions and Donald Trump’s visions for the future to create a strong dollar. However the current spot price is relatively stable due to limited selling and merchant shorts. Similar lows were seen this week in the EU market with only a little resistance, improving €5/t, to end the week responding to the US market. Wheat exports from the EU are still below expectations. Despite Russia’s prices firming due to currency strength, they remain substantially cheaper on the export market at up to $20/t under the French price. As exporting continues to be out of reach, the stocks do the same and the pattern continues, resisting any notion of an upward trend. The European Commission reported EU wheat exports were at 198.3KT this week. This season’s total now stands at a 12.2MMT, down 19% from a year ago.
After starting the week trading up, soya has seen a downturn. Export market supply moving from US to Brazil due to competitive pricing in Brazil is providing resistance to price this combined with the currently strong effects of currency mean, as with other commodities, gains to prices are currently short lived. The US reported very low Soybean sales this week of 360k compared with 615k last week. Talk of some rain in Argentina coupled with slightly drier patterns in Brazil. Already calculated yield losses caused by a three month drought in Argentina are predicted to worsen with hopes pinned on February rain to recover late planted areas.
Meal stocks increased to levels not seen since 2009. Bad weather across the US at the end of the month caused problematic logistics due to frozen rivers and railroads not moving cars timely. In contradiction to this reports that Cargill have stopped production at three of its soya processing plants due to worker strikes could add further uncertainty to the markets.
US farmers are closely watching new-crop soybean futures trade which will be critical in determining prices and influential in guiding planting decisions for the spring. It can be noted that new-crop soybeans are showing similarities to this time last year although the market situation is known to be in a different situation to the market at that time. With the harvest in Brazil only just starting, and China remaining steady in its buying the commercial trade has not yet been pushed heavily. The USDA is predicting 56 Mln T as the Argentine crop figure currently. Reports expect the 17/18 export figures to be at the second highest level in history.
It is almost a story of biblical proportions – as if the Russian hosted football world cup had not had enough problems already. Swarms of locusts could be a huge embarrassment to Russian officials if as feared, the locusts sit down to enjoy some of the football pitches set aside for the World Cup in June this year.
Pyotr Chekmarev, head of the agriculture ministry’s crop farming department, said the pitches could be targeted by locusts during the summer months. Around a million hectares of land in southern Russia was infested with locusts, including around the World Cup host city of Volgograd. If you are looking forward to the World Cup, do keep your fingers crossed, that officials find a way to protect the pitches.