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Weekly Commodity Report 13th April 2019

The May UK wheat contract has travelled sideways throughout this month with minimal movement in either direction.  The lack of direction on either of the main political stories for most of this month, Brexit and US china trade, has the markets – indecisive doldrums!  With mo concrete news there has been very little movement. 

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At this time of year the world is focused on maize and with many UK consumers over bought due to generally mild weather (especially in the ruminant sector) the maize imports continue to affect the normal demand pattern in the UK.  Wheat sales are low compared to the start of the year whilst EU wheat export activity is strong (after a slow start) recovering to within 4.2% below this point last year.   

The large price differential between old and new crop continues.  The November futures are trading currently at £146/T, versus the old crop May wheat futures at £165.75, whilst the gap between physical prices is greater.  Traded volumes have remained low throughout the month, only slightly recovering in the last week as we draw near to the end of the May contract and then, only on technical selling.  Sellers of old crop are slowly coming forward.  The market remains torn between the sanity of supply and demand and volatility of global politics even at this point of the season.  Currency remains both a key driver, and source of expected volatility.  Negotiations between China and the US remain a significant focus.  Reports on both sides state that talks could be nearing the final round, but trade remain reluctant to respond until more concrete news is provided.   The most recent USDA figures increased US and global cereal stocks.  The US wheat end stocks are now the 3rd highest on record at 29.5 Mln T with maize end stocks also the 3rd highest on record at 51.37 Mln T.

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The entire soya bean complex sees similar price resistance and overall little change this month.  Any resistance in the price of soya beans is muted in the soya meal market, where demand and crush levels have assisted with small gains.  The news that the US/China trade discussions could be in close to a resolution was not firm enough news story to sway the trade into action.  Even with winter weather woes continuing in the Midwest it was not enough to push prices definitively, in part due to increases in the estimates for the size of the Brazilian and Argentinian soya bean crops.  Other price negative factors include the increasing estimate for the number of pigs that have been lost to African Swine Fever in China at between 150-200 million animals, and recent weekly pork sales from the US to China of 78000 Mln T, the largest since 2013 when records were started indicating that China’s demand for soya (and other commodities), may be severally reduced. 

With Easter around the corner here are some interesting facts about an egg market we don’t often talk about – chocolate eggs.

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Every year in the UK the average child receives 8.8 Easter eggs.  This is the equivalent to double the recommended WEEKLY calorie intake in just chocolate eggs.  The Easter egg market in the UK is worth £220 million!  80 million chocolate eggs are expected to fly off the shelves in the UK.  Sales are up 8.6% on last year.

Fry’s made the first chocolate egg in 1873.  It was solid, not hollow.  The most expensive egg is made by Choccywoccydoodah and costs £25,000 for 100kg of chocolate.  While the William Curley’s Venezuelan Amadei chocolate egg that sold for £7,000 in 2012 weighed 110lbs and was filled with William Curley chocolates in flavors such as black vinegar, juniper and cassis.

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But most important to many in the UK 500 million Cadbury’s cream eggs are made every year around the world for Easter!  Creme eggs are available every year between 1 January and Easter Day.  In the 1980s, Cadbury made Creme Eggs available year-round in the UK but sales dropped and they returned to Easter only.

We recommend you stick to a tasty, healthy hens egg for breakfast even if the rest of your Easter diet is chocolate!