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

Weather issues continue to dominate the wheat market, providing strong directional movement.

Over the past few weeks US farmers have been busy sowing crops. Corn and soybean planting rates are near or slightly above average, but spring wheat continues to lag. The late sowing of this crop has resulted in slow growth and crop development.

US winter wheat crop conditions have shown little change over the past weeks, despite reports of beneficial rains in parts of the hard red winter (HRW) wheat areas.

The outlook is now turning drier, especially for the Southern Plains, which could stress crops, leading to further declines in condition and yield potential as harvest nears.

European markets have reacted strongly to rising global markets, supported by a weaker dollar/euro exchange.

Dryness concerns persist over parts of the eastern EU, Ukraine and Russia, where a much colder weather system is expected.

France confirmed Algeria had purchased 675,000t, likely to be mostly of French origin, but at a $15/t premium to equivalent Russian wheat. The question remains, how long will Algeria continue to ignore Russia?

UK old-crop dynamics remain little changed, with consumption and merchant short demand supporting higher levels.

While new crop trades higher on the back of firmer, weather-driven global markets, one thing to watch is sterling, which could appreciate significantly if UK economic data or progress in Brexit negotiations are evident.

UK farmers have sold some volume into recent price rallies, whilst end consumers are largely twitching on the sidelines.

Gleadell comment

Weather issues in the US, Canada, Australia and the Black Sea region continue to drive markets higher. The weather is set to have a major say in final output in the aforementioned regions, and the focus of the trade currently remains firmly on the supply side of the equation, not demand.

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

Rapeseed prices on the Matif futures have rallied this week as detrimental weather conditions across northern Europe raise concern over crop prospects.

Dry weather across the Baltics, Poland, UK and northern Germany have stressed the crop at the key flowering and pod setting period, and farmers have already been pointing to early flower drop and aborted pod sites.

The EU crop size could well decline by 700,000t compared with last year to 21.5 mln t, and we wouldn’t be surprised to see the UK crop dipped to 1.8 mln t this campaign, down from 2.1 mln t last year.

However, it is worth noting that this rally is based on forecast issues. If the UK doesn’t have a crop problem, the market will refocus on heavy global oilseed stocks.

With this in mind, we are suggesting to our growers that they ought to be selling a percentage of their new-crop production into this recent rally.