Written Commentary
London Wheat Report
Source: FutureSource
Wheat futures found support today on the Russia-Ukraine conflict fears with the potential impact of shipments in the region according to the trade. Media outlets pumping out conflict chatter continue to pump this sentiment. Traders are starting to add some risk premium with the threat of conflict rising. Algeria has issued a tender to purchase 50kt of milling wheat today. Algeria have also announced a targeted wheat harvest of 2.7Mmt in 2022 according to the Government, allowing Algeria to reduce wheat imports by 26%. Geopolitical chatter has the wheat bulls on the run today. Market reactions for wheat will very much depend on what happens, whether a political deal is confirmed. Wheat has also seen a pickup in fund interest on the buy side. Matif Mar-22 wheat settled up €8.50 on Friday at €281/t. London wheat followed global markets higher.
Brent crude turned bearish today, losing circa 2% at time of writing, trading at $86.14/barrel. Soybeans turned bearish on the lack of support for crude and improving weather conditions in South America. Portions of Argentina and Southern Brail saw good rains over the weekend but it does appear that the pattern is shifting back to a drier bias, but recent rains have provided the ability to stabilize if not improve a good portion of the crop that is in key production phase. Domestic US bean processors appear to be well covered. US soybean inspections meet market expectations at 1.3Mmt. Brazil’s Mato Grosso soybean harvest is 13.3% complete and overall Brazilian soybean harvest is 5% complete. Palm Oil awaits confirmation from Indonesian export curbs. Matif rapeseed fell back substantially with Feb-22 settling down a whopping €37.50 on Friday to €719.50/t.
Managed money maintain a large net long position in Chicago corn. USDA announced sales of 130kt of corn to an unknown destination. US corn exports declined 10% to 1.1Mmt in the week ending January 20th according to the USDA. South America needs 4 months of favorable weather to ensure that the later crop corn avoids any further losses. Matif corn settled up on Friday, with Mar-22 settling up €4.75 at €252.25/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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