Last week’s USDA report did little to affect the price direction of the grain markets as many of the crop production figures hit their forecasted ranges. Poor wheat crops in Argentina continue to deteriorate with further downgrades expected next month. Meanwhile, heavy rains and flooding in Australia simply supported the old adage of “rain makes grain” by increasing their wheat production number – although many expect that harvested acres will be reduced.

Ultimately, the global grain fundamentals for the coming months look supportive, preventing the futures market from slipping lower for the long-term. As illustrated in the chart, wheat prices in the UK post-harvest have been comfortable within a relatively tight trading channel; grain fundamentals as the basis for support, and any Black Sea supply-angst leading to price breakouts on the upside. This week sees the expiration of the current Black Sea safe grain corridor on Nov 19th, and by recent price activity, grain markets believe that a new agreement will be reached facilitating the export of grains from this area. On this basis, the UK wheat market should remain within this trading channel – but look our for any political challenges from Putin as we approach the weekend.

Other than Black Sea volatility affecting grain markets, we also have the UK’s autumn statement this Thursday 17th that is looking to steady the ship two months after the disastrous mini-budget of Truss/Kwarteng. Its affects will be reflected through the value of sterling as the government attempts to avoid the BoE’s projection of a recession. Growers should use any weakness in the pound to secure grain sales as exports become more competitive to the EU.

Have a good week.