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

After a brief breather last week, markets have continued their downward trend. US wheat and corn markets have fallen $8/t as the likelihood of increased yield/production estimates continue to weigh on prices. Key importers continue to snub US wheat when offered as cheaper suppliers line up to sell. Egypt’s recent international purchases equate to over 1mln t, with Romania and the Ukraine again bagging the recent tenders.

EU markets have also eased with MATIF down €6.50/t on the week. Reports of better proteins as the French soft wheat harvest moves north is seen as boosting total output, with latest estimates placing the crop in excess of 37mln t. However, despite one cheap offer, the general ‘line-up’ of wheat offered to Egypt remains about $10-12/t too expensive on a CIF basis.

In the UK, a long-anticipated fall in production after a poor sowing season could be accompanied by better quality. Early reports of wheat being cut suggest quality is good. The UK is set to produce the smallest wheat harvest since 2001, with growers hopeful that lower quantity will be offset by quality premiums. Prices remain under pressure from the wider global markets, and will not be helped by the recent rise in sterling following the Bank of England’s inflation report.

Wheat

• USDA expected to raise US corn/wheat supplies in next week’s report - ideal weather is boosting yield projections.

• Ukraine’s farm ministry predicts grain exports to increase to 28mln t in 2013/14, an increase of 5mln t on last season.

• French soft wheat harvest was 30% complete by 30^th July. Quality improving as harvest progresses into northern France.

• Kazakhstan raises 2013 grain crop forecast to 16.3mln t (clean weight) – 67% of the sown area is in good condition, 30% satisfactory.

• Egypt continues to purchase ‘cheaper Romanian/Ukrainian supplies’ – total purchased now 1.08mln t – less Russian offered.

• Russian wheat prices fall as export demand eases – concerns over quality/final production and export estimates.

• UK expected to harvest smallest wheat crop since 2001 – trade estimates around 12mln t, down from 13.3mln t last season