Currencies
The £ continues to suffer with news this week that inflation hit 10.4% in February, a small rise when it had been expected that number would begin to fall.
We also had confirmation this week as expected that UK interest rates have risen to 4.25% with economists forecasting that we are likely to see one further rate hike before it begins to move lower.
Wheat
This week has seen May futures test a bottom of £188, before settling back up at £204 by the end of the week.. This is significant as breaking through the psychological barrier of £200 was viewed by some as a long shot so to be this far clear of it shows that the trend is weaker, but remaining volatile, and therefore risky!
There are some bullish watch points we need to be aware of for new crop. The current extension to the grain corridor is only for 60 days rather than the normal 120 day agreements we have seen and Russia have been clear that if that 60 days is to be extended further, it will be off the back of sanctions being removed which is highly unlikely.
In terms of weather patterns as well, the US has seen some late cold spells which have caused frost in some areas across the Midwest. France and Spain as well are on a long range alert for drought this summer which would be their second successive drought status.
For now though, there is still a huge amount of domestic grain and this is echoed across the world, and this will give us an historical carry into next season which could counter some of these bullish watch points. There is concern that when May futures expire at the end of May, this will see yet more volume from those futures store enter the market which historically is taken up by export demand. If this happens than June/July pre harvest could see some extreme volatility still and potentially an old crop which is at a significant discount to new crop.
Soya
Soya does feel like it has priced in the Argy story of a 25 MlnT crop and is now focussed on the Brazilian harvest and potential US plantings. Just in the past month we have seen the spot position move from circa £555, up to £575 and settle back down at £515. A market not for the faint hearted!
Sunflower origins for the UK look that they will witch back this season from predominantly Argentinian, back to traditional Black Sea material. This is positive in terms of shorter shipping times, however also comes with its own risks as shipments must pass through the Turkish control which has seen huge vessel lines ups. UK shippers will not be holding strategic stock of product this year at the market volatility just does not support that and with a spot to 3 month buying strategy now in the market for most end users, the supply chain does not want to risk holding unsold stock. This will cause short term supply issues and also pricing spikes which need to be considered.
For that reason, holding a spot month by month buying strategy as an end user is risky and adopting a quarterly approach would allow you to take more advantage of these falling markets without the risk of being caught out by short term supply pricing.
Organic
Organic prices continue to drop on old crop as the market struggles to find any real demand. This should switch as we get further out of the winter period and people look to take on summer cover. For new crop though (October onwards traditionally for organic), prices are now starting to hit triggers against conventional which could signal a move upwards. It could work for producers to look at taking out a 12 month feed contract to take some of the benefit of this new crop pricing to see them through the rest of old crop. Speak to your sales Specialist if this is something you wish to look at.
And Finally…
British Summer Time
Whilst most people can enjoy the autumn clocks going back, the clocks going forward movement is never popular, as an hour of sleep is removed.
So what can you do about it? (do not adjust the timeclocks in your poultry house – the birds do not like it!)
Apparently `move to Greenland’ is the answer.
Greenland, that huge island, which is part of the American continent, but is actually part of Denmark, along with the Faroe Islands. Greenland is also 50 times bigger than Denmark, but it is sufficiently autonomous from Denmark that it can make its own rules. And daylight saving is one of them.
When we moved the clocks forward this last weekend, so did the inhabitants of Greenland, but come the autumn, they will not be moving their clocks back.
On Nov. 24 last year Greenland’s parliament, Inatsisartut, voted to continue with daylight saving time all year-round for the benefit of the 56,000 people in the country. The officials reason being that it will give Greenlanders another hour of daylight in the afternoon, and more time for business with Europe with whom it wishes to remain more closely synchronised (3 hours apart).
Regards,
Kay Johnson & Martin Humphrey
