Commodity Report: August


  • European cereal production is likely to be slightly below average in 2017/2018 for the second year running. In some regions, it is due to adverse weather conditions 1
  • World wheat output is forecast to decrease by 1.6% year on year. However, global stocks are set to reach a new record high. This is largely because of increases of Chinese and Russian accumulated stock 2
  • European wheat exports are estimated to increase by 9% in the current season despite poor weather conditions during the growing season
  • Italian Durum wheat has reported a high protein level in this season’s grain. This allows for blending of this year’s crop with last season’s crop, much of which was of inferior quality 3


  • The German Sugar Industry Association has announced a 31% output increase in its first forecast for the 2017/18 season to 4.9m/T, suggesting good supplies and price stability in Europe 4
  • The Minister for Agriculture has reported that Irish promoters have shown no sign of renewed interest in re-establishing an Irish sugar industry 5
  • The UK currently imports about 1m tonnes of sugar per year, of which 400,000 tonnes is white sugar from the EU, mainly from France. However, Brexit will now give UK farmers the opportunity to replace some of the imports 6


  • The September 5th GDT auction shows a 3.8% and 2.5% increase in Butter and Cheese respectively, while the overall index increased by 0.3% 9
  • Milk consumption has decreased by nearly 5 litres per head in the last 10 years with the downward trend expected to continue over the next ten years 7
  • Irish processors are paying 34-34.5c/L including VAT for milk, manufactured last month 8
  • Recent CSO figures reveal that domestic milk intake by Irish creameries was estimated at 856.6 m/L for July 2017, 9.5% above the 2016 figure 10


  • Prices for crude oil have remained around $52 per barrel rate but may drop as low as $46 in the coming months 11
  • Hurricane Harvey has greatly impacted the state’s 4.4m barrels a day refining capacity causing record flooding and many refineries to close temporarily 12
  • OPEC compliance rates for August have improved to 89% and production cuts will remain in place until March 2018 13

Euro-Great British Pound

  • Euro/Stg parity within a few months has been predicted by many of the top financial institutions (HSBC, Citi and Morgan Stanley) 14
  • Sterling has held at around .92p against the Euro since the end of August, but the gap may close slightly due to the Euro weakening 15
  • The latest UK and IRL Brexit talks have indicated agreement around common travel area, however, the issue of trade and goods has yet to be determined 16

Euro – US Dollar

  • The Irish Purchasing Manager’s Index rose in August to 56.1, which is up from July’s figure of 54.6 17
  • Continued growth in jobs, wages and consumption have prompted the Irish government‘s growth forecasts to show a 4.3% expansion in GDP this year 18
  • Expectations that a corporate a tax rate of between 20- 25% will be introduced in the US in a bid to compete with Ireland’s low 15% Corporate tax rate 19

Great British Pound – US Dollar

  • The USD maintained its strong position against Sterling, as a result of rising consumer confidence following the third month of strong performance
  • The US economy revised its forecasts from 2.6% to 3% on the back of strong GDP growth in the 2nd quarter 20
  • Uncertainty over Britain’s exit from the EU and weak economic results have seen Sterling weaken to its lowest since October against the dollar and euro

Article References




Leave a reply

Your email address will not be published. Required fields are marked *