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

EU wheat values have reached a 4-month high, as the strong pace of exports (due to lack of competition) continues. French wheat remains significantly cheaper than both Russian and US SRW wheat, with German wheat, although at a premium to Russian and Polish wheat, still priced below US HRW. Black Sea winter wheat sowings have been completed, with areas higher than originally projected, but the market’s focus is on the current weather / crop conditions at present.

In the UK, the release of the first official S&D figures place the exportable surplus at a massive 3.5mln t, which with circa 1mln t being shipped by the end of December, leaves well over 2mln t to be shipped in the second half of the season. Spot demand remains brisk, with continued farm retention keeping premiums high. The recent rise in prices has not encouraged end users to extend coverage, and with signs that the spot shortage is slowly getting sorted, the market may become easier as we enter 2015.

In summary, nothing really has changed – it is all about good spot demand and farmer retention. Weather concerns have raised the profile regarding new crop prospects, although better assessment will not be possible until crops re-emerge from dormancy in the New Year. The balance sheet on most commodities remains top-heavy.

• BAGE reports Argentine wheat harvest 22% complete – Ministry projects 2014/15 wheat crop at 12mln t, up 30% year-on-year 
• Defra sees 2014/15 UK wheat imports halving to 1.3mln t – projects exportable surplus at 3.5mln t
• Egypt’s GASC purchases 60,000t French wheat for Dec 21-31 shipment – offered at $10/t discount to Black Sea wheat
• USDA reports winter wheat crop ratings at 58% good/excellent, down 2% points on the week and compared with 62% a year earlier
• Around 11% of Ukraine’s winter grain crop has not sprouted – likely to be re-seeded next spring
• EU wheat prices firm on export demand / improving export outlook 
• US markets firm on strong cash markets – support from corn / soy rallies
• Markets have firmed over the past week, essentially on the various weather concerns around the world. Crops in the US, Black Sea and South America are deemed under threat from adverse weather conditions, and coinciding with a drop in US crop ratings and a shortened week in the US (Thanksgiving) buying support has entered the markets. US wheat remains highly priced against other origins with exports currently running behind last season’s pace.