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September 27, 2018

UK wheat set to recover for a second consecutive week

Domestic prices remain highly impacted by political news surrounding Brexit, even coming from New York this week where French President Macron said he would welcome Britain back into the bloc. For that, a second referendum would be needed and therefore the volatility in the Sterling would likely increase in the run-up to the divorce day which is only 183 days away at 11.00pm UK time on March 29th 2019. The ‘no deal’ option resurfaced at the end of last week and the Sterling immediately posted its worst daily performance (-1.2%) against the single currency in nearly 5 months which in turn lent support to domestic values.

UK wheat has gained more than 4% since the recent low reached mid-September. Charts are turning more friendly for a continuation of the recovery toward this summer highs or at least to fill a first technical gap seen around £180 on Nov-18 LIFFE feed wheat futures. The most interesting feature of the cereals market at the minute is undeniably the narrow barley discount to wheat which stands at around £5-7/T. Local demand as well as export programs running at a rapid pace are the main catalysts and as such, the long term price outlook for grains remains supportive.

For oilseeds, the situation remains tricky due to flea beetle damage reported pretty much across the UK but the recent rain has definitely helped although temperatures are forecast below normal for the week ahead.