Currencies
The £ has been strong this week breaking the $1.41 and €1.16 mark after economic data showed that the UK GDP had grown year on year, supporting the long term supportive outlook for the Sterling. Public spending will also be a key driver in the future so analysts will be watching the impact of the next phase of lockdown easing very closely.
Wheat
The grain markets have seen huge swings in the week, ending on an upward trend again. We started the week with sharp movements upwards on wheat, largely following corn prices, and the continued concerns over the reduction in Brazilian production this season. China have also begun buying large parcels of new crop wheat as the corn/wheat price ratio pushes corn out of their animal feed diets. The issue is, even at these levels, wheat is still ‘cheap’ vs corn so could yet push higher if corn prices stay where they are. Some analysts are talking about $10 corn contracts (we are currently at around $7) but it is important to remember that when fund money gets as heavily involved in agricultural commodities (as they are currently), there will always be someone talking market higher (or lower when the market is going down)!
The second half of the week saw strong sell offs from funds pre the USDA report which was actually more bearish than had been expected with wheat stocks being increased and global production estimates for 21/22 also improving now that most parts of the world have seen good levels of rain over the past fortnight. This downward movement was short lived, as prices moved sharply upwards for old crop after news that a Scottish future merchant who was particularly short of UK wheat had gone into administration.
Whichever way you look at it, markets will not come crashing down at harvest.We are coming out of a tight carryout season, (even if figures are improved) and going into a season which still has some questions over yield potential.
Soya
Soya, like the wheat markets, has not failed to give some surprises this week. Chinese demand continues to push prices higher despite their ongoing Asian Swine Flu outbreaks. Year on year, their soya buying is up 11% and they plan to push their hog numbers up by 20% this year to 613 million heads! We had seen a decent dip of around $15 midweek where again, funds took profit from their long positions and we have ended the week on that same downward trend.
And Finally…
Sheep vs Lawnmower - which is more efficient at ground maintenance?
The University of California have been running an experiment to see if sheep could maintain grass, fertilize and control pests as well or better than conventional landscaping techniques.
The study forms part of their ‘nature heals’ initiative which has also overseen studies on eco system roof gardens. The sheep put in a full day on campus between 8am and 5pm where they are monitored and the ground conditions are tested each evening. The manure from the sheep is then used to re fertilise the area instead of using conventional fertilisers. Although questions have been raised about how this experiment could be replicated for the average household in an urban environment.
Regards,
Kay Johnson & Martin Humphrey
