David Sheppard, Gleadell’s Managing Director, comments on the wheat market

The rally for both old and new crop prices continues, driven by deteriorating crop conditions in the US plains, a need for rain in some parts of Europe and the current political situation between the Ukraine and Russia.

In the US, crop ratings have fallen as dry and windy weather is predicted to sap moisture, leaving crops under stress and vulnerable to adverse conditions. This in turn has led to more technical buying in US grain exchanges. In addition, across parts of the mid-west, melting snow has frozen, and while this has limited the likelihood of flooding, soil conditions remain poor and may delay corn plantings as farmers will not plant into cold soil due to potential germination problems.

The elections in Crimea have resulted in more confusion and will keep markets nervous over the next few weeks, although exports out of the Black Sea are apparently still working normally.

EU and UK markets have risen on firmer global markets, although end-users remain out of the action. Trying to see past the current weather and political issues remains difficult, but with new-crop prospects remaining favourable in the EU and over most of the Black Sea region one has to wonder if current prices will be justified in the longer term.

Wheat

• China to add 60mln t to state corn stockpile in 2013/14 due to bigger crop and lower domestic demand.
• Ukraine grain stocks are reported at 16.2mln t (including 5.3mlnt of wheat) as of 1 March, up 23% year-on-year.  
• Egypt’s state buyer GASC purchases 175,000t (Russian, US and Romanian) wheat for 11-20 April shipment. 
• European spring grain sowings increase pace as farmers take advantage of the drier weather.  
• Ukrainian/Russian political situation still putting pressure on prices.  
• US hard red winter (HRW) wheat continues to drive the rally on deteriorating crop conditions.
• Rain seen as needed in Poland and parts of Eastern Europe.