Weekly Grain Digest - 9th October 2017

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

USDA lowers soybean yields
Sterling strength
Buying demand slowing
Market View:
Following huge volatility in Sterling and Thursday’s USDA report London futures have lost value over the week trading down over 2.5%.

Over the course of the week we saw a large number of comments from a variety of high level individuals involved in the BREXIT negotiations which caused pound/euro rates to move violently from lows of 1.1082 to highs of 1.1258 over a mere 24 hours. Ultimately, Sterling has moved firmer after more constructive comments from EU parties regarding negotiations.

In Thursday’s USDA report the major surprise was a lower than anticipated soybean yield of 49.5bpa which was 0.5bpa higher than expected though counter to this the soybean areas increased more than market estimates.   The net effect saw soybeans rally strongly with some follow through buying activity on Friday. 

The USDA’s corn and wheat figures were largely in line with expectations with Corn seeing an increase in yields offset by a reduction in planted area. On Chicago markets both corn and wheat futures were supported by the large rise in soybeans as the USDA’s figures were released.

As with recent weeks Sterling is expected to remain highly volatile which will continue to impact on London futures. Domestic demand remains concentrated in the spot months but buying demand is slowing down as they are now largely covered. Export opportunities are non-existent as the UK continues to be outcompeted by Baltic and Black Sea origins by a margin. 

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