Frontier Agriculture
Member
World Markets
US wheat moved higher last week. A combination of continued dry weather for the US Plains and a 1.6% drop in the US dollar sparked a round of fund short covering which supported Chicago futures to a higher close over the week. There is sufficient snow cover to protect against the colder temperatures now but parts of the Plains have not had any rain to speak of since October. The threat to wheat crops is not high at this time of year – dry conditions would be more of a concern in the spring when wheat plants break winter dormancy and are most in need of moisture to resume growth. However, as the US drought monitors show severe drought spreading across areas of the winter wheat belt it will remain a watch point, especially in light of the large short positions held by US funds.
Matif wheat started last week on the back foot with currency playing a big role, as the euro touched on its highest levels since December 2014. However, France was reported to connect on export business to Algeria and, along with a stronger US market to follow, this helped Matif to close higher over the week.
There has been some talk of mild temperatures in much of Europe during December and January, creating a lack of winter hardiness in crops. In particular, this leaves the Black Sea region potentially vulnerable to crop damage from late frosts. So far however, the only result of this unseasonably mild weather has been the ability of Russian exports to move at a rapid pace with estimates rising to 36-37 million mt expected to be shipped through the season.
UK Wheat
UK wheat has found some support this morning. Overnight US markets moved higher again, encouraging London to open higher. However, last week saw London futures under pressure throughout closing, down £0.15/t on Friday with a net loss of £2.20 over the week. Slowing UK demand and a growing surplus in South and South East England is starting to drag on London futures.
There is no export demand for UK wheat and this is pointing to a developing issue in the South where our exportable surplus is not shifting. Prices will either need to move much lower to attract shipping interest, or we may see old crop prices move to a bigger discount to new crop to facilitate a stock carry into next season. This is not a strong argument for the long holding of wheat this season.
Oilseed Rape
There may be the possibility of some gains today on Matif and locally with sterling starting the week lower – down to £1.14 from Friday’s £1.15 against the euro. The main reason for this is being cited as the division in government over the approach taken to Brexit.
Overnight, Chicago is 12 cents higher. Drought in Argentina is supporting the complex and for now, the weather outlook remains dry.
US wheat moved higher last week. A combination of continued dry weather for the US Plains and a 1.6% drop in the US dollar sparked a round of fund short covering which supported Chicago futures to a higher close over the week. There is sufficient snow cover to protect against the colder temperatures now but parts of the Plains have not had any rain to speak of since October. The threat to wheat crops is not high at this time of year – dry conditions would be more of a concern in the spring when wheat plants break winter dormancy and are most in need of moisture to resume growth. However, as the US drought monitors show severe drought spreading across areas of the winter wheat belt it will remain a watch point, especially in light of the large short positions held by US funds.
Matif wheat started last week on the back foot with currency playing a big role, as the euro touched on its highest levels since December 2014. However, France was reported to connect on export business to Algeria and, along with a stronger US market to follow, this helped Matif to close higher over the week.
There has been some talk of mild temperatures in much of Europe during December and January, creating a lack of winter hardiness in crops. In particular, this leaves the Black Sea region potentially vulnerable to crop damage from late frosts. So far however, the only result of this unseasonably mild weather has been the ability of Russian exports to move at a rapid pace with estimates rising to 36-37 million mt expected to be shipped through the season.
UK Wheat
UK wheat has found some support this morning. Overnight US markets moved higher again, encouraging London to open higher. However, last week saw London futures under pressure throughout closing, down £0.15/t on Friday with a net loss of £2.20 over the week. Slowing UK demand and a growing surplus in South and South East England is starting to drag on London futures.
There is no export demand for UK wheat and this is pointing to a developing issue in the South where our exportable surplus is not shifting. Prices will either need to move much lower to attract shipping interest, or we may see old crop prices move to a bigger discount to new crop to facilitate a stock carry into next season. This is not a strong argument for the long holding of wheat this season.
Oilseed Rape
There may be the possibility of some gains today on Matif and locally with sterling starting the week lower – down to £1.14 from Friday’s £1.15 against the euro. The main reason for this is being cited as the division in government over the approach taken to Brexit.
Overnight, Chicago is 12 cents higher. Drought in Argentina is supporting the complex and for now, the weather outlook remains dry.