A bearish USDA report last week ignited the touch paper, resulting in a commodity sell-off.

Higher-than-expected US corn and soybean yields, along with a less-than-expected cut in both global wheat production and ending stocks, sent prices tumbling.

This week has seen mixed trading days, with general weakness in the markets continuing until yesterday, when news that the US and China are to resume talks over the current trade dispute has provided some support and markets recovered their poise.

European prices are down about €7/t on the week, following the US negative tone, but losses were limited as the euro fell to a 14-month low against the US dollar.

Given the continued uncertainty over final EU production, the market is doing its best to ensure exports remain at limited levels, with the French looking after Algeria, the odd Romanian cargo going to Egypt, and German wheat going nowhere!

Exports of soft wheat exports to non-EU countries to date total a mere 1.34mln t, compared with 2.34mln t a year earlier, a drop of 43%. Russian wheat still remains the cheapest wheat, and again took the majority share of the recent Egyptian tender, selling 360,000t out of the 420,000t tendered.

UK prices have slipped off the recent highs, trading £10/t down on the week at one stage, despite a further decline in sterling against the firming US dollar.

Harvest progress has increased in the north and west of the country, increasing supplies of available wheat.

News that one of the bioethanol plants will undergo a maintenance shutdown in September, and may limit operations when reopened, intensified the debate over the long-term viability of the sector, given current trading conditions.

This morning DEFRA has released its first estimate for the 2018 English wheat area. At 1.64mln ha, it is slightly above figures released by the AHBD.

If correct, this would equate to about a further 150,000t of UK production, lifting the crop back towards 14mln t. However, AHDB and DEFRA crop or area forecasts are treated with extreme caution nowadays and there is every chance the crop is still nearer 13.5 than 14mln t.

Gleadell comment

"Russian wheat remains the cheapest grain until new crop Argentine comes available early next year. Concerns are still valid on final EU wheat and maize production, and the jury is still out regarding Australia and Canada.

"Weather, politics, sanctions, tariffs and possible government export intervention still make this market a hard one to call. But it is hard to be bearish about wheat, especially in Europe, at present."