The grain column with Emma Croft

Emma Croft, farm trader at Anderson Grain Marketing Ltd.
Emma Croft, farm trader at Anderson Grain Marketing Ltd.

I would like to begin this week’s column by wishing all of our readers a very Happy New Year. As the country gradually returns to work this week, the grain markets are quiet as the trade settles back into a routine of buying and selling.

Feed wheat values for spot collection are mainly unchanged from their Pre-Christmas position.

According to the HGCA, December 2016 was the fifth consecutive month that UK nearby feed wheat futures have gained on the year. They have this week reported that the monthly average nearby UK feed wheat price for December was £136.20/T, a 21% increase on the year previous (£112.60/T for December 2015).

‘Brexit induced’ currency volatility undeniably supported UK grain values in the second half of 2016.

Since 23rd June, the value of sterling against the value of the Euro has fallen by 10% whilst the value of sterling against the value of the US dollar has fallen by 18%.

As an isolated fundamental this has certainly benefitted a UK seller of wheat; as the pound weakened UK wheat exports became increasingly competitive within a global market.

However, currency volatility is of course not the only fundamental at play – a tighter supply and demand situation has also encouraged values upwards. The two combined positions the UK in a rather unique situation as we begin a New Year.

Meanwhile, Brazil’s Soybean harvest for 2016/17 is now underway in the key producing state of Mato Grosso. Brazil is one of the world’s largest suppliers of soybeans with its exports over the past 10 years averaging around 40% of total global exports.

Last year, drought caused production issues for the country and although it is early days yet, it will be worth keeping an eye on harvest progress over the next few weeks, particularly for those of you who still have OSR left in the shed and are looking for the return of £350.00/T+.

The long range forecast for central areas is mixed although generally promising – minimal reports of dryness are causing a slight stir but these are extremely premature. With a record production of 102 million tonnes forecast for Brazil alone this season, the market is perhaps looking for smoke where there is barely a fire?

Argentina has also suffered a dry spell this season and the Buenos Aires Grain Exchanged that we could see a downgrade to both soybean and maize corn production output figures if the problem persists. A change in president back in November 2015 has brought a devaluation of the Peso over the last year or so, making exports extremely competitive, particularly against a European alternative.

With patience the grain market may come back to life quicker than you think!