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

Officially US spring crops (corn and soybean) are now planted. With crop ratings better than expected, and fewer concerns over dryness in the Midwest due to a wetter two-week forecast, fund longs have been heading for the exit.

This has sparked aggressive selling in both corn and soybeans, dragging wheat lower in the process. Since the recent high (June 15th) corn has shed $15/t as weather concerns abate and the potential for a record yield remains. US wheat harvest is reported at 25% complete, with yields in general above expectations, but also some concerns over protein.

MATIF prices have fallen €10/t since our last report, reacting to weaker global markets and rising concerns over EU wheat quality. The forecast has the potential, but not certainty, of more rain in parts of the UK, across much of northern mainland Europe and into the Balkans, bringing little comfort to already sodden crops.

With the potential of greater volumes of ‘feed’ supplies, traders will be looking for non-EU feed markets earlier in this season’s campaign than usual. News that the Egyptian PM will issue a decree instructing agriculture quarantine to adopt a 0.05% ergot policy would point to an international tender soon. This will give a better indication on where the market actually is, given the recent aggressive trades.

The UK LIFFE market has fallen £6/t since our last report. Sterling has been volatile, depending on whether the polls had the leavers or stayers in the lead. Although the nearby focus will be on today’s Brexit vote, and the trade’s interpretation on its effect upon UK agriculture, global pressure and a stronger pound has pushed values lower.

In summary, while crop estimates are increasing, so are the quality issues, China being the latest. Funds are still long on corn and soy, but seem to be losing their appetite given current weather conditions, which may produce further fund long liquidation.

Apart from quality issues and any currency turmoil emanating from today’s vote, it remains tough to back a major rally in global cash markets.