David Sheppard, managing director at Gleadell, reports on the week in the wheat market.

Russian export wheat price falls on signs of competition as Kazakhstan appears on the market. The recent rise in domestic prices has also slowed due to a relaxation of logistical problems, allowing more tonnage to the ports.

Kazakhstan is set for a record grain crop in 2011, approaching 25mln/t with the potential to export at least 10mln/t of grain.

Ukraine farmers have sown 2.09mln hectares for the 2012 harvest or 26% of the planned area as of September 19, but dry weather is delaying - 2.37mln hectares were sown by the same time last year.

Australia wheat exports could reach a record high in 2011/12 as Asian demand rises on high corn values.

The bulk of India’s 2mln/t of planned wheat exports are likely to end up in Bangladesh as the country shifts away from Black Sea supplies on competition prices from its neighbour.

The Chinese government is set to sell 3.7mln/t of corn by November from state reserves to ‘cool’ record domestic prices.

UK wheat exports get off to a weak start in 2011/12 with July’s shipments reaching 112,561 tonnes, down 58% from the same month last year. Lower than normal available stocks were reflected in the drop but also the stronger domestic harvest in Spain normally the UK’s main destination, lowered import demand.

Markets, despite an apparent tight spot domestic situation, continue to weaken, with LIFFE down £8 on the week.

A stronger US$ and the US Federal Reserve warning of significant risk to the economy has resulted in commodity prices falling linked to the pessimistic macro-economic sentiment.  Global competitiveness is seen increasing on increased exportable supplies from Russia, the Ukraine and Kazakhstan and, as long as these supplies keep being offered at considerable discounts to US/EU supplies, the export outlook for EU wheat will focus on ‘normal homes’.