The devaluation of sterling verses both the Euro and Dollar continues. Sterling is down nearly 7% against the dollar, and pushing down that two-year low. Needless to say, the weaker currency continues to have an effect on the UK agri markets.
Despite the currency pressure, UK wheat prices moved down this week, and ended the week at £145.95 for the key November futures, which is especially interesting, when compared to last season’s prices; which were nearer £190/T as a result of the dry weather and reduced export predictions for Russia last year.
UK wheat is moving lower, and with the good crop expected, this could be what is needed to make the UK look cost effective and start early exports. Volumes have increased as the trade reach for the opportunity for deals to be done. As a `no deal Brexit’ is still firmly a possibility, the barley market remains a concern, as trade after the 31st October is uncertain. This could push us further into an already well supplied domestic market with a large crop indicated by harvest progress reports at the end of last week. Barley use in feed is up month on month in June in last seasons cereal usage figures and maize use reportedly up 88.2% last season reaching 652kT. The UK has already demonstrated it can adapt to use these crops when opportunities are seen.
US wheat was also trading lower, as there was another sell off in US agricultural markets, triggered by less than positive indications from the latest talks between the US and China on trade. All indications are that China will retaliate if the US places a further $300 billion in tariffs on Chinese goods. In addition, strengthening Dollar and improving weather forecasts added to losses in the grain markets. Despite some downward revisions in Russia and Canada the global wheat figures still look good. Large crops are expected in the EU, US and Ukraine. As of August 1st, the Ukrainian winter wheat yields were reported to be up 30% year on year at 4.6T/ha and harvest is progressing well. The next question to answer; is the size of the US maize crop area with the next USDA report being awaited keenly. A large Black Sea maize crop currently pressures maize prices lower.
Soya bean markets continued to feel downward pressure during the week. The trade dispute again added to concerns about sales for old crop US soya even before new crop adds its weight to the pile. Beneficial weather in the US for new crop growth would normally be good news, but with concerns high on the lack of alternative export routes and China not likely to be an option with both the trade war and African Swine Fever reducing their requirement for US soya. The trade reacted by increasing the net short positions in Chicago soya bean futures. The release of the next WASDE report from the USDA on Aug 12th will be seen as an important indication of what US acres were planted and so what can be expected. Brexit, no deal and a weakening pound are proving to make importing a challenge therefore there is a potential for soya prices to rise in the UK.
A weekly postscript not for the faint hearted…..
What links farming and vampires? Well hopefully not too much these days, but one late 18th century Connecticut grave containing a suspected vampire has recently been identified via DNA as John Barber. A poor farmer whose hard life had left its toll on him including a broken collarbone and arthritic knee.
The body had been dug up and reburied with his head and limbs piled on top of his ribs hinting that he was suspected of being a vampire. This practice was believed to safeguard the living. But what made people believe he was a vampire? Poor John died of tuberculosis, also known as consumption in the 18th and 19th centuries. It causes ulcers in the lungs leaving the sufferer pale and thin. Infected people also often had blood stains in the corners of their mouth from coughing up blood and receded gums making their teeth look longer. It is likely the spread of tuberculosis to the sufferer’s loved ones was mistaken for the vampire having returned to feed on them. Suspected vampires were often dug up to search for signs of life after death like long nails, bloating or dribbling, but these are all normal parts of decomposition. In other parts of the world suspected vampires had their heart removed, bricks put in their mouth or the classic stake through the heart added to prevent them coming back and feeding on the living. The fact that poor John had no front teeth meant in reality he was unlikely to bite anyone, vampire or not!