US markets closed the year on a negative tone, pressured by sluggish exports (reported down 13% year on year as of December 27^th) and confirmation of higher Russian exports, following the recent meeting between the Russian agriculture ministry and exporters.

Total grain exports were raised at that meeting to 42mln t, up from 38-39mln t previously, with the ministry stating 14mln t would be shipped during the January-June period.

While this provoked the usual knee-jerk reaction, the 14mln t of exports projected for the new year would still represent a 50% fall on the level exported during the first six months of the marketing season.

European markets are still getting up to speed, with many traders in the EU and Black Sea region remaining on holiday. European prices eased slightly over the Christmas period, mainly on the news from Russia, which also eased that country’s domestic values as the rouble firmed.

However, the perceived tightness in supply has widened the spread on Russian wheat in the deferred positions, leaving EU and, more importantly, US supplies more competitive.

The UK market is little changed from pre-Christmas levels, although currency has eased, especially against the US dollar.

With the UK grain trade slowly getting up to speed, markets remain very pragmatic, with buyers and sellers in most cases a few pounds apart.

Next week will see the Brexit agreement discussed in Parliament, with the impending vote due sometime the following week. This should dominate the financial and economic markets during the period, and may cause currency fluctuations, up or down, depending how the debate is proceeding.

David Sheppard, Gleadell’s managing director, commented:

"As the grain trade returns from the festive holiday, many things will need to be watched. Weather in many parts of the world is deemed less than ideal, with colder weather expected in the US, EU and Black Sea regions, where variable levels of snow cover could potentially cause crop damage and losses.

"Adverse conditions in South America could limit the Brazilian soybean crop, and there are potential problems in Argentina’s wheat crop. The US/China trade issue rumbles on, although President Trump has more concerns at home with the government shutdown due to his budget proposals.

"Add in the recent Russian export news and its long-term implications, together with Brexit, and there is a great deal of uncertainty as to where prices go from here."