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Weekly Commodity Report w/e 29th June 2018

There are still two stories to tell as we are still between old and new crop this week.


UK old crop wheat is still firm, although with new crop approaching fast, many sellers are still holding out for higher prices, whilst some are selling before it is too late.  For UK new crop, Nov futures prices hit contract highs on Friday at £163.50/T.  This was due to a number of reasons:

  • Strategie Grains reduced the French wheat crop by 4.6 Mln T on Friday, to 33 Mln T (36 Mln T last year) mainly due to excess rain
  • Russia’s reduction in the size of their wheat crop from 73.1 Mln T to 72.5 Mln T
  • The USDA stocks report on Friday evening,
  • Friday is the end of the month, quarter and first half of the year.
  • Currency is also driving the price trend as the £ is weak against both the $ and €, with 8 month lows against the $.

Dry weather is still reported across much of Western Europe, it is hoped rains in areas of the Ukraine and Russia will benefit the spring crop.  However the Russian ministry lowered the grain harvest forecast to 100 Mln T due to delayed and dry sowing conditions.  The Agriculture ministry declared 12.2 million hectares of spring wheat, which was down from 13.1 last year, with Siberia’s cold wet weather as the main reason for the reduction.   It is hoped that a positive report of 39 Mln T for the French wheat crop will balance out some of the overall loss.   

In the rest of the world the US-China (and others) trade disputes continue to cause the fund sell-off of US Agricultural products.  The US tariffs are expected to be implemented (or not) next week.   Despite all agricultural prices dropping in the US market it has not been enough to stimulate demand for US grain.  With reports of a generally healthy new crop, there is increased potential for an increase in US stocks with nowhere for them to go in the short term.   


Following the month long downward trend for soya, the prices have started firming and many observers were calling the bottom of both the soya bean and soya bean meal markets.  Despite this small sign of change it is expected that either a dramatic change to the expected weather or some resolution in the US-China trade discussions will be needed to fully drive the markets price up to where it would be expected.  The USDA reported sales of soya bean meal at less than 96% of forecast for 2017/18 but still relies on 35,000T of sales each week from now.   With the difference between the cost of soya from the US compared to other destinations continuing to increase, there is a growing disconnect between actual world needs for soya and the market price.  The uncertainty of the effects of political decisions and trade disputes is the main trade focus.  At some point the focus will need to correct for tightened global stock levels and the price trend should follow.    

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George Orwell’s 1984 ‘Big Brother is watching you’, Person of Interest, Enemy of the State, Minority Report, Skynet in Terminator – all fiction.  Fact: China has released an App called ‘Sharp Eyes’ a system which allows its 1.3bn citizens to spy on each other using their mobiles and TVs.  The software combines artificial intelligence and facial recognition so the public can watch live feed, and report suspected illegal activities to the police.  The project started in 2005, and in 2011 Skynet - the rural version - was launched to reduce public security costs.  Last year the $500m Skynet was linked to 20m CCTV cameras.  By 2020, the Sharp Eyes system will cover all of China.  However once the software is downloaded on to a smartphone or smartTV it takes control of the microphone and camera to extend the surveillance system to households and individuals.  Police alert buttons are now being built into TV remote controls.  And I thought Police speed cameras were bad.