David Sheppard, Gleadell’s managing director, comments on the wheat market

Despite a forecast rise in global stocks, US markets have resumed their upward trend, supported by strength from neighbouring soy and corn markets.

In addition, the arrival of the first major winter storm in the US plains, along with an expected cold blast, has lifted concerns for recently planted US winter wheat, especially with a general lack of snow cover to protect young plants. And reports that Ukraine was redeploying troops in the east seem to have introduced a political premium back into markets as tension escalates.

EU markets continue to trade under the spectre of limited farm selling and a weaker euro. Winter wheat sowings are almost complete, with both Russia and Ukraine increasing their winter grain area compared with last year.

While reports place 83% of Ukraine’s wheat crop in good condition, concerns remain over dryness in parts of Russia with looming colder weather expected to stress crops. Farmers remain reluctant to sell grain although the fall in the rouble actually increases the value of export wheat.

In the UK it appears that the festive break has started early as a marked pick-up in demand has done little to encourage farmer selling. Farm prices continue to find support and, with producers unwilling to chase the market lower, the likelihood is for further gains, especially in the spot position.

The UK remains a net importer, with official estimates placing exports to end-September at about 300,000t, compared with imports at 600,000t. With the recent rally the UK has lost some of its competitiveness and, with an exportable surplus of about 3.5mln t, the likelihood remains for an above-average carry-out in wheat stocks.

It's that time of the year – bulls talking of colder weather killing crops and bears saying it’s winter, it’s supposed to be cold, and asking where do all the EU and US wheat supplies go? Black Sea currency problems will not support a build-up of stock – and the recent market driver has been from other markets.

Supplies of corn and wheat are more than plentiful as confirmed by the USDA this week, but until the soy complex trades normality, grain market fundamentals are meaningless.

• USDA reports winter wheat crop ratings as 60% good/excellent, up 1% point on the week and compared with 65% a year earlier.  
• Ukraine’s grain exports to 10 Nov are put at 12.99mln t including 6.8mln t wheat, 3.3mln t barley, 2.7mln t corn.
• Ukraine winter wheat sowings exceed forecast at 6.2 mln ha.
• Egypt’s state buyer GASC purchases 235,000t of wheat (180k French and 55k Ukrainian) for 11-20December shipment.
• Argentine government announces export quotas – 8mln t corn by March and 1.5mln t wheat by 15 Dec.  
• UK remains a net importer as September’s wheat exports of 150,334t falls below wheat imports of 187,971t.
• Crop bureau FranceAgriMer reduces end of season soft wheat stocks on improved export outlook – but at 4.3mln t this still represents a 10-year high.
• USDA lowers US corn and wheat stocks and raised slightly global corn and wheat stocks.
• US markets gain support on fund short covering triggered by weather concerns and Ukrainian tension.
• Market consultant Strategie Grains forecasts a smaller EU 2015 wheat crop of 148.7mln t (155ml t in 2014) – area seen similar, but yields likely to trend lower.