This week’s market movers: Grain market daily

• Nov-22 UK feed wheat futures closed at £281.00/t yesterday, down £4.00/t from Monday’s close. The Nov-23 contract also lost ground, closing at £269.15/t, down £4.90/t over the same period.
• Paris rapeseed futures (Nov-22) settled at €646.25/t yesterday, up €13.00/t from Monday’s close. Rapeseed markets were supported by the wider oilseed complex, with soyabeans supported by strength in both commodity and equity markets (Refinitiv).

With fluctuations in exchange rates, reports of the war in Ukraine escalating and the US maize harvest progressing, UK grain markets are being influenced by mixed sentiments this week. Below is an overview of the main factors that are moving markets this week.

Exchange rates

Currency fluctuations continue to influence markets this week. Yesterday, sterling strengthened against the dollar, closing at £1=$1.473, levels last seen before Liz Truss’ ‘mini budget’ announcement. This was the sixth consecutive rise and added pressure to domestic wheat markets.

The US dollar eased against other currencies yesterday, following a fall in the US treasury yields. Furthermore, the pound continued to strengthen following the chancellor’s budget U-turn. The dollar has since strengthened today, while sterling weakened again, ahead of the PMs speech.

It is likely that volatility in sterling will continue following the outcomes of the Conservative Party conference, which concludes today. However, the Office for Budget Responsibility is due to deliver its initial forecasts to government on 7 October for the government’s fiscal plan. This may provide some certainty for markets on delivery.

Black Sea war

The war in Ukraine has escalated following Putin’s annexation of four occupied Ukrainian regions. It’s been reported that Ukraine have advanced against Russian forces over the past week, taking back control of a number of towns in these so called captured regions.

The escalation in the conflict is thought to be affecting exports from Ukraine, with shipments of grain and oilseeds slowing, according to a Refinitiv source.

If there was a slowdown in shipments from Ukraine, this would likely add some support to markets, with the war remaining a key watch point.

US maize harvest

The size of the US maize crop, along with rate of harvest, remains a watch point for markets. As always, harvest pressure adds a short-term bearish sentiment to markets. However, at 20% complete as at 2 October, harvest progress is behind the five-year average of 22% complete, according to latest USDA data. US maize harvest progress will continue to influence markets. The next USDA World Supply and Demand Estimates are scheduled to be released on 12 October, with any revisions to US maize output being a key watch point.

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