The announcement of a General Election on the 8th
of June has seemingly taken everyone in politics and financial markets by
surprise. Theresa May’s decision to hold a snap election has boosted the pound
to levels close to €1.20 against the Euro; one can only assume that with the Conservatives
holding such a strong lead in the polls, traders view this as better for the
economy and for the Brexit negotiations that are yet to begin.
As a result of the stronger Pound, old crop values have
fallen to around £148/t for May with French wheat now at parity with domestic
values and cargoes are expected in the next 4-6 weeks. Furthermore, with May
traditionally being a well sold month, buyers will not be too anxious about
where supply will come from, so a slight downturn in prices is not wholly
unexpected.
New crop values are beginning to dominate the thoughts of
growers as we creep towards harvest. Levels are relatively unchanged over the
last month with November wheat anywhere between £136-138/t and as-available, £131-133/t.
Fear is starting to grow both here and abroad about soil-moisture levels; areas
of eastern and southern England are in desperate need of rain whilst large
regions in France and Spain are suffering from a multi-month rain deficit of
30-50%. Whilst none of these areas is currently in ‘drought’, a prolonged
period without meaningful rainfall could be the difference between a good crop
and an average or, worse still, poor one.
Old crop oilseed rape continues to come under pressure from
imports and a stronger Pound and it is hard to see much of a revival above
current levels around £330/t ex farm unless there is any late demand at the end
of the season. Harvest OSR is struggling to make £290/t at present and with the
perception of a smaller acreage in the ground than previous years it is hard to
see many being tempted to sell forward.
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