Currencies

Currency has been volatile this week with Sterling losing ground as we approached the Sunday deadline for Brexit talks with no news of a deal.  Reports that those talks were to be extended and drip-fed comments that things are progressing helped push £ against the $ up to a 6 month high of 1.36.  It has since settled back slightly but the thought is that if we do get a deal in place, then currency will rally further. 

Wheat

Wheat has seen another choppy week.  Global markets initially rallied after the USDA report which increased Australian, Canadian and Russian crop sizes, but also increased global demand.  This meant the market focussed more on the Russian export tariffs and the potential tightness that could bring to the Northern hemisphere, certainly in the short term.  In theory there is sufficient wheat in Australia to plug the gap that Europe has, but logistics and freight are currently maxed out.  US export figures were also up 40% on the previous four weeks which helped add support to the market. 

The UK, May 21 futures rallied £11 in a week with news that there was still no Brexit deal.  Traders began to build in a risk premium in anticipation of having import tariffs come into effect.  The market did give back around £4.50 of that rally as news of the extension to talks broke, however, the UK has only imported 1.3 MlnT to the end of December, meaning that there is still need to import a further 1 MlnT between January and July which so far, has not been purchased.  This is likely to make for a continued volatile market, but is unlikely to be a cause of any lower prices in the short term. 

Soya

Soya continues to follow the same stories this week. Markets are still finding support from the lack of rain across South America and the feeling that the USDA report last week did not take into account any downgrade in crop size that would cause. Beans have traded at a four and half year high this week and strikes by Argentinian port workers is now also causing logistic issues and further supporting prices. Argentina reported this week that their plantings were at 50% good/excellent, which is down 5% in a week. Brazil have also announced that they will need to buy US beans in 2021 to satisfy their own domestic appetite but also the increased sales to China. China have now recovered their hog population to 90% of their pre swine flu levels, with plans to reach 100% by the end of Q1 next year. This will only go to fuel further demand although at the moment, their inventories are looking very high. Looking at the US 2021 crop, figures were revised up this week to 89.435 Mln Acres planted, up from 89.065 Mln Acres in November and up from 83.105 Mln Acres in 2020.

And Finally…
Santa caught on camera giving his reindeer a ‘team talk’ ahead of the big day!

This is the moment Santa could be heard speaking to his reindeer in Alaska with some disappointing news for one of the team.

Pointing to one of the herd, Santa tells him, ‘you’ve lost your antlers this year so you are off the team, there is nothing I can do about that.  Try again next year’.

He then goes onto explain the importance of running up so that the sleigh gets plenty of height to ensure that they can get round all of the boys and girls on Christmas Eve. 

One reindeer is clearly not enamoured by the team talk and can be seen walking off part way through. 

Regards,

Kay Johnson & Martin Humphrey