Weekly Grain Digest - 09/10/2019

The COFCO UK Weekly Digest brings together a wealth of global grain intelligence to summarise this week's market drivers for grains and oilseeds.

Grain

Brexit Uncertainty Leads to More Uncertainty
Heavy Snow in Canada / Northern US Plains
Defra's Latest UK Production Figures
Market View:
It’s been a dull week for wheat with a lack of news and sideways choppy price action.

The main market focus at the moment remains the same with traders watching southern hemisphere weather with ongoing dryness in Australia whilst Canada and the Northern US plains are experiencing heavy snow.

This is helping to lend some support but neither story is currently enough to make any significant impact on global production. Any decreases in production for Australia and Argentina are mainly being offset by increases in BS and EU. Estimates for Russian wheat production have gradually crept higher as harvest draws to a close with estimates now back up to 76Mmt.

Brexit is of course dominating UK headlines as negotiations with the EU seem to have stalled. This is making UK grain markets extremely tricky to read and forward export business close to impossible. We are quickly running out of road as the October 31st deadline approaches and recent currency market moves suggest the prospect of a ‘deal’ is becoming increasingly unlikely. Whilst a weaker Sterling should support grain prices, the lack of free access to European markets will be a significantly bigger factor.

Defra’s latest production estimates published this week show UK wheat at a four year high of 16.3Mmt and barley at a record 8.2Mmt (an increase of 26% on last season). Even after a busy start to exports, it will be a huge challenge to ship the surplus especially in the current environment of continued Brexit uncertainty.  One of the biggest challenges to shipping the surplus will be logistics and availability of trucks.