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

A $10/t fall on the week in Chicago was very quickly turned around on news that Russia’s agriculture ministry will meet grain exporters on Sept 3rd.

This has stoked rumours that some form of export curbing will operate to slow Russian exports, the pace of which has appeared unsustainable to many traders. Given that US wheat markets are oversold, the news sparked new buying interest.

Like the US, European prices dipped earlier in the week before recovering on the Russian news.

Egypt purchased another chunk of wheat, mainly Russian, for October shipment this week, but the fact 1mln t of Russian wheat was offered at the tender confirms that exporters are willing to export while they still can.

EU prices continued to be domestically based, with what little export there is being mainly confined to France (for Algeria and Africa) and Romania (for Egypt).

UK prices have followed the general trend, currently trading up £1/t on the week. Little has changed in that time, apart from a firming in sterling after EU chief Brexit negotiator Michel Barnier’s comments on the likelihood of some sort of a deal being achieved.

Gleadell comment

It now looks more likely to be when, rather than if, the Russians pull the export plug. The current pace would suggest early in 2019, but with legislation to be approved, early October may be when that becomes official.

Then the statisticians go to work. It appears that the earlier 35mln t of Russian wheat exports projected by that country’s ministry were ‘greatly optimistic’ and, with EU exports going nowhere in a hurry, the current 23mln t of EU exports projected by USDA also looks highly unlikely.

Therefore, when and by how much do USDA start adjusting their global export matrix, pulling demand back into the US? Until we know that, the UK market will continue to trade under the influence of politics (Brexit) and its currency implications, with an eye on global export ramifications.

However, UK farm prices are still historically high and, as we have witnessed in the past, market rallies have provided selling opportunities.

Jonathan Lane, Gleadell’s trading director, comments on the OSR market

Since our last report, the soybean market in the US has continued to decline as crop estimates continue to grow.

Favourable growing conditions have pushed forecasters to predict a crop that will exceed last year’s by about 6.5mln t and prices have fallen by $11/t in Chicago.

Politics continue to play a big role in all markets and the impact of the China/US trade spat continues to rumble on and communications are still on-going. There have since been reports of swine fever outbreaks in China, raising questions about the volume of soy meal that will be required.

In Europe the rapeseed market has followed the soy market down, falling nearly €10 since last week’s report. The Matif rapeseed futures have been impacted by the sharp move in the euro/dollar rate as political issues raise their head in the US.

Global production of rapeseed is down sharply year on-year and the crops in Australia and Canada are under pressure and likely to fall further. These crop declines should support European values as we go into the winter, but with a record US soy crop on the horizon and ongoing currency fluctuations, the market may well be in for a bumpy ride.