Written Commentary
London Wheat Report
Source: FutureSource
Orthodox Easter Monday today for 10-15% of the world. Things have started kicking off in the Sudan since Saturday am as rival factions flare up, supposedly Wagner are there in the background stoking the flames. Egypt are getting a little tetchy, especially with the close proximity and control of the Nile inflows into Egypt. US banking shares are down following customer withdrawals over the past few weeks. Brent crude was trading lower.
Funds CBOT wheat short has increased, hitting a 5 year high with 104,247 contracts for W/E 11th April, an increase from 87,083 a week earlier, almost entirely on new gross shorts according to Reuters. Wheat markets were given an uptick today following the Kremlin outlining the usual chat in regards to the corridor being extended which includes:
- connection of Rosselkhozbank to the SWIFT settlement system;
- resumption of deliveries to Russia of agricultural machinery, spare parts and service that fell under Western sanctions;
- cancellation of restrictions on insurance and reinsurance of Russian ships with grain and lifting of the ban on their access to ports;
- restoration of the operation of the Togliatti-Odessa ammonia pipeline (the UN promised to open it in December 2022);
- unblocking foreign assets and accounts of Russian companies related to the production and transportation of food and fertilizers.
Nothing unsurprising here and whether they’ll get it all will be up for debate. In other news on the Eastern European sphere, Poland + Hungary + Slovakia have announced bans on grain and other food imports from Ukraine to protect their domestic producers. Poland have announced this will be enforced till June while Ukraine are trying to confirm that cross country transit will still be allowed. Egypt has upped its wheat procurement price for 2023 by 20%. The condition of French soft wheat improved slightly in the week to April 10, with 94% of crops rated GD/EX condition compared with 93% the previous week according to FranceAgriMer.
Matif wheat was supported, pushing higher on the back of Chicago and the Black Sea chatter. May-23 Matif was trading up €4.75 this afternoon at €254.75/t, which is pretty strong stuff considering the fundamental situation in Europe. London wheat also pushed higher, with May-23 hitting highs of £199.75 in today’s trading, very much the opposite direction in comparison to estimates. London wheat is heading towards first tender day on 25/04/23. OI still standing pretty strong.
Corn was trading marginally higher/unchanged as US weekly corn inspections exceeded projections with 1.21Mmt in W/E 13th April. Brazilian soybean harvest pace is sat at 86% which is below their average pace, crop is still looking an absolute stonker and has already shot past all previous production records. Matif rapeseed found support, with Aug-23 hitting a trading high of €462.75 before settling up €20.50 on Friday at €461.25/t.
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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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