How low is low? As US wheat, and yesterday US corn, traded at new contract lows – with corn taking out the previous low from August 2016 – the trade continues to try to work out the answer.

Favourable weather is entrenched across much of the US Midwest, leaving conditions ideal for crop development – plenty of moisture and no severe heat.

The recent fall in US wheat prices should enable hard red winter wheat to compete into North Africa, a scenario which tightens the domestic supply and demand. With wheat exports are currently running 12% ahead year on year, we need to see some evidence of price rationing.

European markets continue to feel the pressure of global weakness, with MATIF slipping another €3/t on the week, stretching the run of either trading at, or setting, new daily lows to 15 consecutive sessions.

MATIF has now fallen €30/t since the heady heights of early July, due to a firm euro, lacklustre export demand, and increasing crop estimate from Russia.

Six weeks into the 2017-18 marketing campaign, EU soft wheat exports are running 60% behind last season’s pace. With experts stating that Russia’s 2017 grain harvest may reach 130mln t, and that wheat may exceed 81mln t, this does little to lessen the prospects of a continued aggressive pricing strategy from the region.

UK prices are only down £1 on the week, as a weaker currency gives some support to farm prices. Harvest activity, especially in the north and west, has increased, although the volumes of available grain have been unable to reduce the supply squeeze on the market, keeping spot prices relatively firm against the deferred values.

In summary, as they say ‘tops and bottoms’ are for fools, but with markets at contract lows and generally favourable weather prevailing, more downside potential is likely in the short term.

The results from Algeria today will be of interest, especially for France, as with this season’s extra production it needs Algeria as an export destination, although on paper US HRW should work out cheaper.

Elsewhere, it’s much of the same.  Russian and Black Sea prices are likely to continue to drive the markets lower.