Monday Market Briefing - 1st March 2021

Old and new crop held on to modest gains last week, despite stock markets and commodities taking a turn lower amid warnings of  inflationary pressures appearing quickly when economies emerge from lock-down. As usual, cash exiting the London stock markets eased the Sterling exchange rate and gave our home wheat prices a gentle boost.

News that Vivergo will re-open their bio-ethanol plant in September also helped, it will have been closed for three years by then. The Govt announced we will be adopting E10 grade ( 10% ethanol ) fuel at the pumps from Autumn 21 and current market parities would likely encourage manufacturers to use wheat rather than corn when production eventually fires up in Jan 22.

Markets will have to decide what this means for the UK wheat supply balance. We are currently pricing new crop against our neighbours to reflect having an exportable surplus again this year but could the return of bio-ethanol demand alter that position?  Surveys suggest wheat areas in UK have substantially recovered from the 2019-20 debacle, but are not quite back at the levels of the previous year. Even so, with the crop widely reported as being in excellent health, we think a 15.5 mln tonne crop is plausible at this stage and as long as that stays the case we don’t expect to see any market adjustment from the current position.

New crop prices are close to the highs of the January rally and might just give up some value in quiet trading this week.

BAF harvest storage space for harvest 2021 is now on general release after existing customers completed their returns. Speak to your farm trader if this is of interest, the information pack is also available to view on our website.

Have a good week and stay safe.