Grain prices dropped sharply during the Christmas period, with economic uncertainty in the USA sparking a sell-off by investors in global futures markets.
“Seasonal profit taking, potential of storms bringing needed moisture to the US plains and early forecasts of a rebound in global wheat production next season all resulted in fund liquidation, pulling CBOT wheat prices back to a six-month low,” said Jonathan Lane at Gleadell Agriculture.
However, the last-minute deal to avoid the so-called “fiscal cliff” in America encouraged a rebound on Wednesday (2 January), meaning UK wheat values improved to about £200/t ex-farm for spot movement – about £6/t below the pre-Christmas level.
With American markets under pressure, importers were opting for American wheat instead of French or German supplies. But a new investment fund announced by China and Ukraine could see a jump in agricultural production in Ukraine in the coming years, according to a report by analyst Agritel. “The financial involvement should reach $6bn.” Investment in fertiliser, irrigation and infrastructure should boost production in the future, to help meet Chinese import demands.
Back in the UK, DEFRA’s final 2012 estimate confirmed wheat production of 13.26m tonnes, 13% down on 2011. October exports fell to 90,355t, with imports at 226,874t.
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