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

Although the US stocks report was bullish, the acreage report was bearish and this set the tone for a lower market. Corn acreage, the highest for 77 years, was about 2mln acres above trade estimates and, with favourable weather entrenched across the mid-west, yield potential remains positive.

Egypt’s first international purchase since February raised comments on ‘how much political risk premium’ has been built into the prices, given the vast difference in the range of offers. China continues to purchase new crop corn and wheat at prices well below domestic levels, leaving many believing that USDA is underestimating Chinese import needs, especially given growing reports of domestic crop problems.

EU harvests have commenced in the west with reports of good barley yields from France and Spain. Earlier-than-expected wheat harvests in the Black Sea region also continue to report higher yields than 2012.

UK markets are about £5/t and £2/t down respectively for old and new crop and farmers remain reluctant sellers. Domestic demand is sluggish as most end-users expect lower prices and are staying clear of the market. New crop values have slipped to levels seen more than a year ago and, given the current global bearish sentiment, could move lower, especially if corn values continue to ease on improving new-crop prospects.

• USDA reports corn planting at 97.379mln acres, defying forecasts. This is the highest planted level since 1936.

• Crop-friendly weather continues to dominate the US mid-west corn- and soybean-growing regions.

• Egypt purchases 180,000t of Romanian / Ukrainian wheat for shipment 10^th-20^th August – well below French / US offers.

• Russian wheat prices fall as harvest gathers pace and higher yields are reported.

• US drought expands for third straight week in the southern plains - may impact upon early 2013/14 US winter wheat plantings.

• China purchases another 3 cargoes of US corn bringing total purchases of new-crop US corn to 2.8mln t.

• China purchases 300,00t of Australian wheat following reports of damage to domestic crops.