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Pandemic impacts commodity markets

Panic buying of products such as bread and potatoes due to coronavirus fears is supporting prices in these sectors.

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Feed wheat achieved a 9-month high.
Feed wheat achieved a 9-month high.
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Coronavirus pandemic impacts commodity markets

But malting barley demand is likely to suffer as a result of a reduction in gatherings where alcohol is consumed, as coronavirus prevention measures are implemented.

 

According to AHDB figures, milling wheat in Northamptonshire for delivery in March had increased by £10/tonne to £185/t on March 19 compared with the previous week.

 

Demand for bread products was increasing as shoppers cleared supermarket shelves, bringing millers back to the market and adding weight to the increase in old crop wheat prices, according to Frontier Agriculture.

 

Ben Bodart of CRM Group said with sterling crashing to its lowest level against the US dollar since 1985, old crop May-20 LIFFE feed wheat had jumped by more than £11/t to reach a nine-month high.

 

Mr Bodart said: "Further support is seen from buyers securing short-term requirements ahead of any supply chain disruption,"

 

The coronavirus pandemic has also seen oil prices plummet by more than 60 per cent in the year-to-date to their lowest level in nearly two decades, as fears mount over a slowdown in global growth, added Mr Bodart.

 

Oilseed rape prices were down 17 per cent from their peak in January.


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Oil prices reached their lowest level in nearly two decades.
Oil prices reached their lowest level in nearly two decades.

Frontier’s Frontrunner blog questioned how much further oil prices may fall, saying any additional losses will directly impact on the price of biodiesel which, in turn, will act as a drag on all vegetable oil markets.

 

The global malting barley market has been hit by the outbreak of coronavirus, according to Frontier.

 

The postponement of all sport, implementation of social distancing measures and closure of pubs, restaurants and other social gatherings will have implications for malt demand with little certainty of when normality might be restored, analysts said.

King Edward packing potatoes gained £25/tonne on the week.
King Edward packing potatoes gained £25/tonne on the week.

Demand for potatoes has soared

Panic buying linked to coronavirus has boosted retail demand for fresh potatoes and frozen products this week, according to AHDB.

 

King Edward packing potatoes gained £25/tonne on the week, on average, with some trading up to £300/t.

 

Prices firmed across the board but it was a different picture globally for processing potatoes which were traditionally sold to foodservice clients with a large export market.

 

The EEX EU April 2020 processing potatoes futures price started off 2020 at €180/t (£166/t) and as FG went to press, this was down to €50/t (£46/t).

 

The physical price in Belgium has dropped by a third to €100/t (£92/t) and there was no quote this week because of so few free-buy trades.

 

It was echoed in the UK, with sales into food service drying up as the public moved away from restaurants and public spaces.

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