Written Commentary
London Wheat Report
After yesterday’s stray into the green, it looks as through strong buying is keeping prices from sliding too much further. Underpinned by strong supply from the likes of Egypt (reportedly buying 770,000 metric tonnes of primarily Russian wheat), it looks as though the past weeks’ price drops could be near their completion. However, ample world supplies and discussions afoot pushing for the relaxation of the Russian grain price floor will no doubt limit the upside price potential as northern hemisphere harvests progress.
Corn future prices have also experienced similar strengthening on the back of “bargain-buying” whilst today saw soybeans dropping back down into the red. US soybeans in particular are allegedly the world’s most cheap and oversold commodity. This title has been generated in no small part by vast fund short positions with corn in a similar position depicted in the graph below.
Source: Refinitive
Closer to home, the German Association of Farm Cooperatives stated that the country’s wheat output will reduce by 6.2% down to 20.2mnt – continuing the story of crop reduction estimates that we have seen time again this year. Their gloomy view on output was also applied to rapeseed which is reportedly 10.0% down from last summer’s crop (meaning a harvest potential of 3.8mnt). Revisions in harvest estimates are largely down to wet weather that has hammered western Europe for the past 10 months. As the combines start rolling across the continent, dry weather is imperative to prevent yet more reductions in output.
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