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Weekly Commodity Report 13th July 2019

The November UK wheat price is currently trading at £147/T.  However in reality there is a lot of variation in prices being offered, as players try to balance their book, and the prospects for the coming season.  The price has started to creep down slowly over the last week. 


Trading has been quiet on both London and Matif wheat markets in connection to the US markets closing for Independence Day.  The London Nov 19 wheat contract is £2.80 lower on this week, with May 20 down £3.30.  Overall the EU is selling a positive story for new crop although news from individual countries is mixed.  France has slightly increased its wheat production forecast with the southern region harvesting, while Strategie Grains reduced both the wheat production and yield forecast for Germany 2019/20 wheat.  The forecast of 23.65 Mln T it is still well above the 20.14 Mln T in 2018/19.  A slight downward revision of the UK wheat production forecast to 1.8 Mln ha with no change to the yield forecast at 8.07 T/ha led to a slight reduction in the of 14.5 Mln T.  This is still 1 Mln T over the previous year’s harvest.  The UK barley crop has started to be harvested in the southern counties.  Indications are that yields are positive although it is early days.  However the Spanish barley crop is looking positive so they may need to import less from the UK.  This may pressure all UK cereals downwards with increased competition for domestic homes for grain.

US agricultural commodities were showing a similar picture to the EU with all but maize down.  However, 2019 maize production in the US is currently estimated as 330 Mln T The FAO left world cereal production unchanged at 2,685 Mln T, almost 33 Mln T over last year.  Wheat production made up a significant part of this gain up 40.6 Mln T.  Independence day meant little was happening for most of that week and wheat has continued to trade sideways.  Weather forecasts are little changed this week with the weather improving and warmer.  It seems like the trade would rather wait to see if a new week brings new news. 

The Russian harvest has started and early indications are that yields are exceeding the forecast and quality is good.  First indications are that wheat yields are 9% up and barley 14% y/y.  Black Sea exporters are concerned over the lack of export business due to the IKAR consultancy in Russia lowering its grain export figures for the 19/20 marketing season from 46 to 45.3 Mln T due to earlier lower grain crop forecasts.  This may drive some aggressive offers from the region in the coming weeks. 


The Argentine harvest for Soya beans finished at 56 Mln T.  Chinas demand remains a focus for the market and recently they bought 6-8 cargos of Argentine beans.  With the next survey results in a few weeks the trade can only use political news and weather to drive decisions.  Soya bean prices continue to be pressured despite global demand for oil forecast to increase due to continued record US soya bean supplies and decreasing demand from China as ASF continues to reduce pig numbers and be under reported.  However the EU rape production is expected to be significantly lower in 19/20 due to decreasing demand and soya beans meal use is likely to increase by over 1 Mln T to fill some of this gap.

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In the late 1980s an Inuit hunter named Jens Larsen killed three strange looking whales off the western coast of Greenland.  In 1990 a marine scientist Mads Peter Heide-Jorgensen took the skulls to the Greenland Fisheries Research Institute and suggested these might be hybrid whales – A cross between a narwhal (famed for the male’s long helical tusk) and a beluga (known for its white skin).  The skin was uniforn grey and the flippers like a beluga and the tail like a narwhal – he started calling it a Narluga.

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Despite it being known that these two species are similar sizes and known to swim together at times they have never been known to breed.  Hybrids are very rare and almost always created when animals are forced to live in captivity together with limited access to other animals.  But science has now allowed the unlikely story to be proved correct as DNA extracted from the skull one of the animals is in fact the first genetic example of this cross breed whale from the wild.  The Natural History Museum of Denmark showed the male animal had a buluga father and a narwhal mother as most of its DNA was a 50:50 mix of the species but its mitochondrial DNA inherited only from a mother was full narwhal.  When naming hybrid animals, traditionally the father’s species is first in the mash up name.  A cub from a male polar bear and a female grizzly is a pizzly bear but switch the parents and the cub is a grolar bear.  This makes this whale a belwhal not a narluga. 

Brought to you by Melanie Blake and Martin Humphrey