Written Commentary
Sean Barry 2025 ChicagoCIO ORBIE Finalist
February 6, 2025
Bean and oil markets continue their rally higher today. A drier forecast for south America has not helped. The NOAA talk of possible drought conditions across the Central US in the long term forecast which added to the continued fear of recent crop damage gave wheat a boost today. Slightly more optimism of a US economic recovery may have also helped all prices today with hopes that demand will return following the strong vaccine rollout.
In the EU, Paris wheat prices reach levels not seen since 2013 on talk of a squeeze on front month futures.
The AHDB released their latest UK supply and demand forecast today. 2020/21 wheat production was dropped by 475kmt from November to 9.658mmt. Imports were also lowered by 100kmt to 2.1mmt, leaving total availability at 14.196mmt. Down from 14.771mmt in November and down 26% on last season (19.19mmt). Total wheat consumption was also significantly lowered from November to 12.623mmt (-814kmt) due to lack of price competitiveness. This includes a 7% drop in human and industrial use and a 20% drop in animal feed use year on year. Taking into account the 1.5mmt operating stock requirement this now leaves a 73kmt stock surplus compared to a 166kmt deficit in November. These numbers do not however take into account any wheat exports, which up to the end of December had reached 117kmt, meaning a 44kmt supply deficit already exists but is less than previously feared.
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Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2025 ADM Investor Services International Limited.
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