Monday Market Briefing - 26th October 2020

Markets remained firm as expected last week: China, weather worries, and the same stories adding another £2 to already high values. This week is half term and with traders unable to attend the cancelled European Bourse, many are on holiday, so a quieter week is expected with any move possibly on the sell side if profit-taking sets in. Michel Barnier has reportedly remained in London over the weekend, so the possibility of Brexit talks making progress still lurks in the background this week. Activity in port is frantic as European buyers of UK grains rush to beat the potential deadline. Our home Port of Shoreham is loading on average two vessels per week continually since harvest and we expect this to continue right up to years end.

The AHDB rather gamely published their early UK supply and demand balance sheet on Friday. Pitching the UK wheat crop at 10.1 mln tonnes was broadly in line with most estimates and leaves us with the smallest wheat crop since 1981. In what must be a first, they declined to complete the calculation for our wheat ending balance, as the numbers really can’t be reconciled without making some overly inventive assumptions. But essentially, we know we haven’t got enough wheat and expensive imports are necessary. The exact amount required can wait for another day and its unlikely the news will be a driver for the market immediately.

Another large barley crop was confirmed. Barley production was pegged higher than the 2019 crop which we think might eventually be revised down as spring barley yields were a long way behind the previous year, certainly in the south. There are encouraging signs of the export campaign firing up now to clear that balance (which is much more readily traded beyond the EU than wheat) . With ports now so busy, the only challenge will be fitting all the vessels in.

Have a good week and stay safe.