‘Up on the rumour, down on the fact’ is an apt description of the US market this past week reports David Sheppard at Gleadell.

Fund buying increased ahead of the long Labor Day holiday weekend, on the assumption that the Russian agriculture ministry would restrain exports when it met shippers on Monday.

But, following a statement from the ministry saying that while they would monitor the situation, no curbs would be imposed, the situation reversed on Tuesday.

The European market followed the US up last week and down this. At current prices, EU wheat is going nowhere, with soft wheat exports reported at just over 2mln t for the season-to-date, down almost 50% year on year.

Russia will continue to offer aggressive export prices while it is still able to, confirmed by another 600,000t offered at yesterday’s Egyptian tender. However, GASC, Egypt’s state buyer, only purchased a sole 60,000t cargo, at a $7/t discount to other offers.

Russia’s wheat exports are running 60% ahead year on year at 8.2mln t, against a backdrop of a wheat crop some 15mln t lower. That suggests the pace will have to slow at some stage, but how this is achieved, and more importantly when, nobody knows.

The major news in the UK market this week, is the announcement by Vivergo that it plans to close its Hull ethanol plant at the end of September and is  entering consultations with employees.

This releases a lump of wheat back into the supply chain and removes a major influence in the northern wheat market for a while. It means we won’t have to import as much wheat or maize this season and our exportable surplus will grow a bit too.

Gleadell comment

In summary, the Russian statement sent the market into sell mode and, short-term, will keep any potential market rallies in check. Long-term, issues such as the China-US trade war, NAFTA, Argentinian export taxes, Russian export policy and in the UK, the Vivergo factor and Brexit, will continue to keep the market choppy and difficult to read.