Weekly Grain Digest - 03rd December 2018

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


US-China Soybeans Trade
Argentine Wet Harvest
Weak Sterling
Market View:
In what seems a rare occurrence there has been positive news this week regarding the development of US-China trade talks. After months of stalemate and posturing it seems the US and Chinese trade ambassadors have managed to see eye to eye, enough at least to enable agricultural exports to be back on the table. 

China have committed to purchasing ‘a significant volume’ of Soybeans from the US this season. As a result, trade of soybeans between China and the US has restarted with hopes that subsequent deals will also be made in corn and wheat. This has helped Chicago futures firm this week and markets feel more buoyant. Also helping sentiment is the fact that in this week’s GASC tender, Egypt had to pay the highest level it’s seen in the past 4 years (and sharply up from the prices they paid last week).

Globally, weather patterns remain generally favourable for most areas. However, the quality of Argentine wheat remains a concern as heavy rains have continued to slow harvest and threaten further crop damage. Elsewhere, temperatures in the US have remained above normal and melted recent snow cover which has helped soil moistures. This is fine unless temperatures start to drop.  At this time of year, the trade will be keeping an eye on snow cover levels and temperatures in the US and EU/Black Sea.

The ongoing Brexit Saga has continued to impact UK prices. Sterling has had a torrid week as the parliament vote was delayed on Tuesday when Theresa May conceded she couldn’t get the deal through parliament in it’s current form. Following Monday’s announcement, Sterling dropped heavily v’s the Euro to trade at just above 1.100 (the lowest level since the end of August). A weaker Sterling and firmer global markets mean London futures moved higher (£3/mt) on the week trading back up to £179.75 on the May LIFFE contract on Friday.


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