Monday Market Briefing - 24th August 2020

As harvest in the South staggers towards a slightly soggy conclusion, attention is drawn to the post-harvest landscape. LIFFE had a strong day Friday – following MATIF in reversing earlier dips to end the week slightly up. China’s buying of French wheat and barley has found the front pages again. China is certainly on a global buying spree across commodities, and reports suggest they have booked nearly 2 million tonnes of French 2020 crop (wheat and barley) already. The worlds fleet of panama-sized vessels are headed for French Ports to load.

China is locked in a heavy-weight political battle with Australia, the US and the WTO. Enhancing links with alternative suppliers is a key element of their strategy, but in the short term it’s hard to judge what the wider impact will be. The reported trades are within the scope of similar business last year and it will be difficult for France, with a reduced crop, to beat last years tonnages. More likely, this trade flow will open doors for competitors to sell into France’s other traditional customers notably in North Africa. The UK barley crop, naturally low in moisture this year, could easily figure.

At home in the UK, the poor yielding wheat crop made national news this weekend amid predictions of food price hikes. Wheat does look worth holding on to for a while longer – but there are excellent prices on offer already and no market goes up forever. There is no world shortage of grains this year; far from it, and eventually that fact will come home to roost. Keep an eye on the wheat bids, there might just be something there to tempt you.

Fridays close above £165/MT Nov20 LIFFE was at the upper end of the recent range, a neutral week is probably in store.

Have a good week and stay safe.