The US market is trading up on the week as markets continue to consolidate. Extreme cold weather, increasing the risk of winterkill, continues to prevail across many areas of the Midwest and Plains through into early February.

This, together with talk of record low US winter wheat sowings, is helping to underpin the market, although snow cover is more than adequate in most places.

Rumours of possible purchases of US wheat by China, provided next week’s planned US/China trade talks progress well, plus higher global prices and talk of lower than expected Russian supplies, are also supportive.

European prices are also higher on the week due to firmer global markets. Despite sluggish exports to non-EU countries, still reported 27% lower year on year, markets are reacting to signs of falling Black Sea supplies.

Both Russian and Ukrainian ministry officials have raised concerns over the current export pace. Russia’s agriculture ministry has asked exporters to submit all export sales for the remainder of the season to determine the full extent of their export programme.

In the Ukraine, the ministry has put exporters on warning over further exports, as milling wheat shipments have already reached 83% of the agreed 8mln t target. The big question is, what is the level of demand still to be covered?

UK remains Brexit driven, as sterling has strengthened on the likelihood of a softer or delayed Brexit. As a result old- and new-crop London futures, have eased to their lowest levels since mid-November.

Consumer coverage appears adequate, with little enthusiasm to extend cover in the deferred position, due to the uncertainty over Brexit.

Gleadell comment

The apparent decline in Russian availability is at last pushing global prices higher and, if the US/China trade talks go well, the rumoured Chinese purchases of US wheat would clearly be supportive. However,it is certainly true the US has the stocks to sell!

While this would also support European prices, the outlook in the UK is less clear. If the UK drops out of the EU with no deal, the pricing mechanism of future UK wheat shipments into the EU would then fall under the current EU import quota system. We would have to compete against other third country supplies, including the Black Sea countries.