Monday Market Briefing - 19th October 2020

As our Brexit deadline passed, the UK Government did not entirely ‘shut the door’ on further talks. It’s difficult to say what it all means, but GBP opens this week slightly stronger suggesting some at least feel a moment of danger has passed safely and a deal is now more likely – not less. Currency movement remains a significant risk factor in our domestic market.

The latter part of the week was instead dominated again by Chinese activity, buying more French barley, and new estimates from the US suggest they might buy as much as 30 million tonnes of corn globally this campaign. If anywhere near true, that’s a shocking number. Since 2010 China has averaged closer to 5 million tonnes of annual corn imports so this news would represent a six-fold increase.  It brings into question not just the availability of enough material in exporter nations this year, but also the assumptions that have previously been made about the depth of Chinese stocks from previous years. It will be interesting to see what analysts come up with in trying to balance these extraordinary trade flows.

Wheat is not being chased quite so hard, but another week of firmer markets is on the cards; exchanges hitting new highs, and enough drought threat in several areas to keep things interesting going forward. Continental buyers are getting involved in this ever shortening export window to buy the grades of UK wheat they need. Malting barley is also trading well for both 20 and 21 crop years. We don’t expect to see a shortage of spring barley acres in 2021, despite the open autumn, UK wheat acres this year are set to swing back upwards to ‘normal’ levels but not very much beyond.

Have a good week and stay safe.