This week UK May wheat futures hit a 5-month high at £146.75. The 2017/18 UK wheat supply and demand has remained tight, despite the high level of imports.
Exports have been minimal both here and in the EU, and the delivered feed wheat market is near import parity for the north of England. With the continued wet weather, spring planting is being affected, especially in the north which is causing delays in black grass control and fungicide programs. In addition Yorkshire based company Vivergo announced the re-opening of its bioethanol plant following a four month ‘maintenance’ shut down due to low bioethanol prices and poor production margins. If Vivergo source all their feed wheat (1 Mln T/annum) from the domestic market, supply could tighten yet further. FranceAgriMer lowered the French wheat ending stock for 2017/18 by more than 0.5 Mln T due to an increase in its EU exports (to 8.9 Mln T from 8.5 Mln T). This however was not enough to increase prices with the € holding against the $ adding pressure to the markets.
The USDA World supply and demand report failed to trigger expected market interest and buying for the US wheat market. Dry US South Plains weather and wet cold North Plains weather combined with a drop in Russia currency (which could help increase Russian wheat exports) added pressure to US wheat prices. The report highlighted an unexpected increase in the US old crop carry out by 0.8 Mln T to 29 Mln T as they reduced old crop feeding to the lowest level since 2007. This latter observation seems not to be shared by the trade. Global wheat production was raised 1 Mln T to 760 Mln T. Overall world ending stocks rose 2.3 Mln T to 271.2 Mln T. Following the report, it is expected that weather and politics will remain the drivers for the commodities markets.
The USDA reduced the Argentinian soya crop to 40 Mln T from 47 Mln T. The 2 Mln T increase in the Brazilian soya crop was not enough to hold back the market due to the overall loss of volume, and the continued tension over tariffs and trade between the US and China and a potential trade war. Global protein prices rallied through the week with only a small relief at the weeks close. News that the Chinese President Xi Jinping, in his speech at the Boao Forum for Asia, took a step back away from a trade war drove US prices up; he promised to cut tariffs on auto imports and other products. He outlined China’s plans to open up its economy, ease import restrictions, and respect intellectual property rights, all of which Trump has criticized China. Most economists believe that China has more to lose than the US, in the event of a trade war. It is felt that market attention will now focus on tight world soya supplies. News that the US had exported soya to Argentina was taken as a sign the market is trying to solve the soya meal supply issue caused by the smaller Argentine crop. Although the USDA announced a sale of 120,000 T soya, some suggest as much as 400,000 T. This is the first Argentine purchase of US beans in 20 years. The report also raised US crush figures by 0.27 Mln T to 54 Mln T. US old crop carry out came in lower at 15 Mln T. Looking at the global picture, world production was lowered by 6 Mln T.
People do strange things when they have had a drop too much juice; like accidentally falling off a mountain, but not accidentally climbing up a mountain in an attempt to find your hotel? Pavel, a 20-year old Estonian was enjoying the après-ski at Breuil but disorientated thought the ski run was his road home. Some 3 miles later, climbing hard, and at a height of 2400m at 3am he found an empty mountain restaurant (red arrow), where he broke in and fell asleep; he was found by the restaurant staff the next morning. If he had turned left, instead of right, he would have been half way up the Matterhorn!