This week saw another turnaround Tuesday as the market reacted strongly to Monday night’s US crop reports.

From being $5/t lower on the week, the market had surged $9/t by Thursday.  US winter wheat crop development was reported well behind last season, with the percentage of the wheat crop in the headed stage put at only 13%, compared with 30% last year.

The key state of Kansas had no wheat in the headed stage, compared with 23% a year earlier, which was deemed a concern, and similar yearly declines were also noted in Oklahoma and Texas.

As these three states account for just over 50% of the total US winter wheat plantings, slow development of the crop could hinder yield potential and greatly influence final 2018 output.

Paris wheat is trading €1.50 up on the week, with support coming from the surge in US markets and a slight weaker currency.

Talk of hot and dry conditions in central Europe and the Balkans, plus a cold and wet start to Russia’s spring, where winter wheat growth lags behind last year, is also providing support.

Analysts have already started to trim the Russian 2018 wheat crop, although some of the estimates seem to be too much, too soon.

Old-crop London wheat futures are about £5/t down on the week, although this is now a technical market linked to where wheat may be tendered and is having little or no impact upon physical prices.

Delivery premiums, especially to the distant destinations in the north-east and west, have, if anything, increased over past weeks as ongoing demand continues to be met by limited offers.

In the southern and eastern parts of the country, the steam has been taken out of the market as traders look to take advantage of tendered futures-stored wheat to meet contractual requirements.

Gleadell’s comment

In summary, wherever you look in the world, weather seems to be having an impact.

In the US it has stalled spring sowings, likewise in Western Europe. Cold and wet conditions are seen slowing growth in the Black Sea region, while dry conditions are having a similar affect in the US plains.

Australia has turned much drier ahead of winter planting and although Argentina expects a larger sown winter wheat area, this will depend on conditions after a multi-month drought.

All-in-all, a recipe for higher prices, but the buffer of increased EU, Black Sea and global inventories provides security for a rainy day, of which there should be a few between now and harvest!