Wheat Market

European prices are down $10/t on the week, following the global trend.

The market continues to pull export trade away from Russia, although to date this has not resulted in a significant rise in either EU or US exports.

As expected, France took the majority share of this week’s Egyptian tender (180,000t) with Romania, Ukraine and Russia each doing 60,000t.

Whilst the French value was close to replacement, both the Romanian and Russian figures were well below. Traders suspect the sales were trade longs dumping tonnage ahead of a possible realignment of the current old crop/new crop inverse.

Supporting this idea is the expected rebound in 2019 wheat production in the EU and Russia, following this season weather-related harvests.

UK prices are down £8/t on the week, with sterling firmer against both the euro and the US dollar.

Market dynamics remain little changed, with the current spot-position supply squeeze lifting delivery premiums. Deferred positions remain relatively quiet on both sides.

The past week seemed to have all markets racing for the bottom as a new-crop two-year low hit Chicago. Both Paris and London closed at the yearly lows set in February and March 2018 respectively.

While trade optimism over a potential US/China deal should lend support to soybean and corn markets, the wheat complex is slowly running out of time. Unless US sales show a significant upgrade in the next week or so, the markets could see selling pressure, especially if Russian exporters continue to gamble on the current market inverse.

OSR Market

The Matif rapeseed futures market is sharply lower on the week due to falling demand and the imminent arrival of large-scale southern hemisphere imports into the EU.

The old-crop supply-and-demand picture is starting to look heavy, highlighted by the narrowing of the carry by the old- and new-crop contract months on futures markets.

With the potential for a big fall in production in the EU in 2019 and ongoing drought issues as growers prepare for plantings in Australia, one could argue that the market will need to carry out bigger stocks.

We wouldn’t be surprised to see the old crop/new crop market structure move to encourage old crop seed to be carried. However, this is likely to manifest itself in further relative declines in the old crop market.

The bearish week on the Continent has affected UK farmgate prices. Values have continued to slide as a firmer pound and the temporary closure of a major processing plant in France create further opportunities for imports into the UK.

We understand multiple vessels have been traded and import shipments are arriving into both of the UK’s major domestic crushing facilities.