London Wheat Report

Source: FutureSource
Chicago soybeans continue sucking diesel on the second day of bullish gains. New multi-month peaks achieved as dry weather in some South American growing belts stoked supply concerns. US and European wheat futures added further gains to reach two week highs, tracking corn and soy whilst also drawing support from underlying market support. CBOT soy complex is continuing to gain support with beans heading for a 4 month high, meal is pushing 7 month highs and oil appears to be consolidating its move away from the 6 month lows of last week. South American weather reports are piling on the pressure. Brazil in particular where soil moisture is a key concern – Brazilian states of Parana, RGDS and SC account for over 30% of total crop with Parana GD/EX ratings having slumped from 71% to 57% this week. Brent crude remains supported, last trading at $74.74/barrel at time of writing.
Matif rapeseed continues to climb with another new all-time trading high today on front month (Feb-22) hitting €754.75/t. Front month squeeze is pulling May-22 up, with the market anticipating continued gains. With a rumoured shortage of seed for delivery, it will be interesting to see much further it climbs and by the looks of it, we may see unbelievable numbers toward the new year. The graph below shows Matif rapeseed front month (orange) and second month (purple) continuation since July 2021.
Wheat support continues. Chicago Mar-22 was trading up 14 cents on yesterday and Matif Mar-22 hit a trading high today of €290.75/t. London wheat followed markets higher with May-22 hitting a trading high of £232/t. Ukraine have announced they are considering limiting wheat exports in the first half of 2022, with officials expected to decide on the issue mid-January, two sources familiar with the discussions told Reuters. Concerns surround strong exports driving domestic prices for milling wheat, making staple foods more expensive at a time when Ukraine’s inflation is close to 2018 highs. In 2020, nearly 40% of the average Ukrainian person’s income was spent on food (Kyiv Post). With Russia’s tighter harvest this year and export quotas starting in Feb, the trade were hoping that Ukraine would be helping to fill the gap. Serbia are seeking to establish wheat storage silos on the Suez canal to target wheat exports for the Middle East, African and West Asia. Australian wheat harvest remains debate continues, both exportable volumes and quality.
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Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
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