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

The market has been on a roller coaster ride this week, trading the Russian export factor and the 'will they, won't they' scenarios. Comments that no government restrictions were imminent weakened the markets earlier in the week, only to be followed by the VPSS confirming it had started to vet export grain quality, granting certificates only when quality conforms with the rules of four importing countries (Egypt, Turkey, India and Armenia).

Vain attempts to prop up the rouble with massive interest rate rises has seen a slight recovery, but with ever decreasing oil prices and Western sanctions crippling the economy, Russia is in a mess!

In Europe, the perception held for some time that Russian exports would slow significantly, if not halt completely, continues to grow, and with the EU the first beneficiary, markets have firmed. Russian wheat managed to find its way into Egypt at the latest tender, but this was more a case of traders discounting values to ensure supplies were shipped ahead of any government intervention. EU wheat exports continue their record pace for the season, but many question whether the current volumes of quality wheat offered can be sustained.

UK values have firmed, following global markets, although this has completely switched-off the consumption trade. Buyers don't believe the market, given the global surplus, and there are cheaper grain alternatives available. Higher prices have encouraged some selling, both from growers and merchants.

In summary, the market is all about Russia. The loss of Russian exports, though we may only be talking 2-3m tonnes, will be picked up by other exporters, but not the US. Its prices are now too high, driven by fund shorts, and this could turn out to be the long-term problem for the market - where does all the US wheat go?

The expected slow-down in Russian exports may cause further price rises, but this should encourage farmers to plant every square inch possible for 2015, especially in countries where farm values are supported by weaker currencies. In addition, a more protracted Russian export programme may, in the long term, ensure that final exports are closer to the current USDA projection, rather than if a complete ban was imposed early in the new year.

• Argentine government approves issue of an additional 1mln t of wheat export licenses.
• Russia could harvest more than 104mln t of grain this year. 
• UK wheat export jump fails to end stockpile fears.
• UN Food and Agriculture Organisation sees record 2014 cereal output, but food insecurity worsening. 
• Egypt’s state buyer GASC purchases 180,000t (120,000t Russian, 60,000t French) for shipment 11-20 January.
• Russian government approves higher grain purchasing price (state intervention) but still below export value.
• Ukrainian/Russian wheat crop seen falling in 2015, despite increase area, due to weather concerns and lower yields. 
• Wheat prices surge over Russian export restrictions – Veterinary and Phytosanitary Surveillance Service (VPSS) imposes quality checks on export wheat.