Wheat Market

The US wheat market is unchanged on the week, while corn is firmer on good export sales and shipments.

Traders remain cautious because, although competing global suppliers are supposedly reducing export availability, the US has not yet secured any additional wheat export business.

Current figures show US shipments down almost 30% year on year. The year-to-date total is less than 25% of the USDA yearly projection, with another eight months of the marketing season remaining. Funds are square on Chicago wheat and need signs of additional US demand before going long.

European markets are marginally lower on the week, although little fundamentally has changed. As witnessed in the US, shipments of soft wheat beyond EU borders remain dire at just 3.8mln t for the season-to-date, down 29% year on year. The only notable exporters are France at 1.9mln t and Romania at 1.3mln t.

The summer drought will probably mean that Germany, in most years one of the largest EU exporters, is expected to become a net importer to balance domestic feed demand.

Russian wheat is still easily the cheapest origin. Although prices have edged higher this week it remains aggressively offered, but for how long?

UK prices are marginally higher on the week, with currency slightly weaker against both the US dollar and the euro.

Delivery premiums in the north and north west of the country remain under pressure from the fall-out of the Vivergo closure, although end-users show little enthusiasm over extending forward coverage at current levels. Following the drop from the recent August highs, growers have slowed their selling activity, being more concerned with sowing and general fieldwork.

Gleadell comment

In general, another week with little change. Traders are still closely monitoring Australia, where crop prospects are going backwards, and Russia over any signs of government export intervention

This leaves the global market in a quandary, with funds uncertain on their next directional move. Fundamentals would point to forward support in the US markets. With both the EU and UK remaining domestically driven, there remain few arguments at present why these markets should move lower.

 OSR Market

Despite the sharp fall in rapeseed production this year, prices in Europe continued their steady decline over the past week.

The summer drought across northern Europe slashed production by about 2mln t compared to the previous harvest. With similar issues in both Australia and Canada, global production has fallen sharply.

These production issues initially helped prices and gave some cushion from the negative fallout from the downturn in soybeans. However, logistical issues and the switch from rape to soybean processing by multi-seed plants in Europe are undermining demand, and the shine has subsequently worn off the rapeseed market.

The weaker pound had helped cushion UK farm-gate prices from the full effect of the market’s decline, but UK crushers appear to have good coverage in the spot positions.

Winter biodiesel demand and the potential of further cuts to Australian production has the potential to help rapeseed values, but it will be the US and its trading relationship with China that sets the market mood. This, combined with the Brexit led swings in sterling, will maintain a significant degree of price uncertainly for the foreseeable future.