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

US markets eased lower during the past week as improving weather allowed farmers to progress with corn and spring wheat plantings. Corn is now reported at 95% complete, and with the initial crop ratings placing the crop as 76% good/excellent, traders are looking at any potential area loss in the northern states being offset by stronger yields in other areas.

Spring wheat plantings were reported at 88% complete, with again the northern states being where the crop is left to plant. The USDA will release its initial spring wheat crop ratings next week, and early harvest reports from the south are expected to reflect the impact of drought stress.

EU markets have tracked the US lower, as like the US the weather outlook is seen as positive towards crop prospects. With the old crop season into its last month there is little to report – exports will reach an all-time high (28.25mln t all-wheat to the end of May and on target to hit 30mln t) and farmers have been absent from the market, across the EU until recently, when we hear that farm sales have accelerated.

Black Sea spring plantings are progressing well and will be close, if not over, the intended planted area when complete in both Russia and the Ukraine. Recent crop estimates put the Russian grain crop at 97mln t, with the Ukraine ranging between 57-63mln t – if achieved both countries should project export potential at the levels witnessed during this season. The French wheat crop is reported in good condition, at 75% good/very good, with harvest expected to begin 2 weeks earlier than last year.

UK values again are slightly weaker on the week, trending lower like the other exchanges. New crop levels (LIFFE NOV14) have retraced back to the lows witnessed at the end of January, leading to some light buying activity, but generally both end-user buying and farm selling remains behind the normal pace for this time of the year.

In summary, another down week! Wheat harvests are up and running in the US and China, and will soon start in mainland Europe and the Black Sea region. With Algeria missing July on its import tender (purchased Aug and Sept shipment) an early French harvest may cause a few problems, ie where does the wheat go, especially with reports that Black Sea farmers will soon have to bring wheat to the market, and large wheat crops are expected in Poland, Romanian and Bulgaria.

As we stated last week, we are already at the harvest lows of last year, but the market indicators want to move lower - the question is how low is lower? A weaker Euro vs Sterling is not helping either.

Wheat

• USDA reports corn plantings 95% complete / spring wheat 88% planted
• Ukraine’s 2013/14 grain exports seen at 31.4mln t at end of May (includes 9 mln t wheat / 19.7mln t corn)
• Ukraine seen heading for record grain harvest in 2014 of 63mln t according to the state weather forecasting centre
• Ukrainian 2014/15 grain exports put at 30-32mln t – total exports for 2013/14 will be around 32mln t
  Russian spring wheat plantings complete on 11.4mln hectares (87% of planned area) and 1.9mln more than last year
• Kazakhstan Ag ministry reports grain export a/o end May at 8.21mln t, up 27% y/y
• Western Canada plantings lags because of soggy conditions
• Rains in parts of US southern plains seen as too little, too late for hard red winter (HRW) winter crops - still stuck in drought.