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

Markets have re-traced off the recent high as concerns over the threat of Russian export restrictions diminish. Analysts report that Russian grain exports are expected to remain high during December, fuelled by a weaker rouble. Given the statement from the Russian deputy prime minister that the government is not considering any form of export restriction, this would point to early next year before any further move could be expected. Add on the 30 days notice period required in the official journal and this would allow exports through February, by which time any interruption to the market would be significantly reduced.

EU markets have also weakened despite the record export pace, pressured by the news from Russia and an improving euro/US dollar exchange rate. A season-high figure of 1.7mln t of soft wheat was exported from France during October, supported by the first shipment of the season to Egypt. These and recent sales to the US and Korea has resulted in crop bureau FranceAgriMer increasing its non-EU wheat export projection for the season and trimming end-season stocks accordingly. Opinion remains mixed on how long the export pace can be maintained, both in terms of quality and actual demand, as much as the recent import interest was due to stock-building on the perceived threat to Black Sea grain exports.

UK values are also weaker on the week, although spot premiums remain high on continued short covering. The rally in prices has kept end-users away from what they see as an over-inflated market, while farmers remain relaxed sellers on firming prices.

The USDA, as expected, has confirmed an abundance of grain stocks which, even allowing for the current concerns over new crop prospects (US/Black Sea region), argues for lower prices based on the sheer weight of 2014/15 global supplies.

The news from Russia that potential export restrictions might have been imposed made the market. The reality is, that this threat is diminishing and if it doesn’t materialise we could see further price falls.

• Russian grain exports as at 3 Dec reported at 18.27mln t, including 14.6mln wheat, 2.6mln t barley and 0.82mln t of corn.
• Ukraine grain exports as at 3 Dec reported at 15.6mln t, including 7.5mln t wheat, 3.3mln t barley and 4.6mln t of corn.
• Statistics Canada reports Canadian all-wheat production for 2014/15 at 29.28mln t, up from 27.48mln t in October estimate.
• Russian regulator yet to start using new rules for grain exports – deputy PM states ‘not discussing export restrictions’.
• UK regains export status in October (first month for almost three years) but season-to-date figures still place UK as net importer.
• French soft wheat export reach a season high of 1.7mln t in October – crop bureau FranceAgriMer increases non-EU export projection, lowers carry-out stocks.
• USDA trims US corn stocks, slightly raises US wheat stocks and increases global stocks of both commodities.
• Kazakhstan cuts grain export outlook as rains dent crop quality.