Monday Market Briefing - 23rd October 2023

Events in the Middle East have caused concern in global commodities markets.  Still an important region for crude oil, any escalation of the conflict by Arab nations will further rally oil prices, and encourage investors to move towards safe-haven commodities such as gold, and other precious metals.  Ultimately, war is not supportive of grain prices as consumption will be lost, and grain vessels will be unwilling to travel to these volatile areas.  This is particularly alarming for neighbouring Egypt – the largest global importer of wheat.  Not forgetting the ongoing war in the Black Sea area, disrupting grain availability to both Europe and China.  With current support for all commodities, grains and oilseeds could be swept up in higher prices, or at least temporarily.

Back in the UK, the completion of most of the autumn cereal drilling has coincided with farmers engaging with grain markets in good volume once again. Generally, growers are still behind the pace against a normal marketing campaign following a late harvest and tricky weather patterns. The hesitancy to sell into spot markets has allowed values to remain good, and opportunities still available for pre-Xmas movement – something not always seen at this time of year.  The post-drilling lull also allows farmers to take stock of grain inventories, and get any drying or retesting completed to know what is actually in there.

Global consumption – long thought would return to normal levels post-lockdown – is still languishing well below levels seen pre-2020.  Should demand recover, then supply and macro-global issues will play a larger part in price direction.

Have a good week