ADMISI London Wheat Report

Beans and rapeseed surge higher once again, with Soybean prices up 45% since April and may look to test the $12.085 highs of June 2016. Corn also looking to post a higher close for the 4th consecutive day, pushing up to the highest level since January. A weaker USD and hopes of further Chinese buying demand were supportive. Fact funds now have the largest combined bean and corn position since 2012, suggesting expectations of a similar drought year.

Talk of improving conditions in the US and big yields in Australia may have pressured wheat this week, as does the short wheat hedge vs long Corn and beans strategy.

Australian wheat becoming very competitive into Asia and the Middle East markets in place of US, BS and EU wheat. However the trade spat with China continues. Wheat crop estimates here range from 28.5mmt (USDA) to 34mmt.

Talk of German wheat factoring into traditional French wheat destinations (Algeria) but in general the EU is slowly pricing itself out of export competitiveness. Domestic users of Russian grain are still calling for stricter export restrictions despite the 15mmt quota announcement as prices there remain at all-time highs. Fact that both Russia and Ukraine are reporting 5% increases in winter wheat planted areas could eventually weigh on prices and offset some of the dryness impact on yield. However, talk of taxes here and higher EU prices suggests little downside for US wheat prices short term, especially with higher corn prices. Growing Australian competitiveness could be the caveat here.

News that Pfizer finds vaccine 95% effective in final trials and calls for emergency approval may have also supported prices today. Fact covid cases and related deaths continue to increase in the west will have weighed.

UK wheat market very much a follower today with little fresh news here. A stronger GBP may have sheltered London from outside gains somewhat. Physical wheat market remains quiet. Barley discount to wheat still +£40/t and talk of decent barley exports continuing into the new year.  

 

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