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

Chicago wheat traded higher on the week as the weaker US dollar and some weather worries prompted the latest round of fund covering.

In Europe the MATIF followed the US market higher despite the firmer euro with politics, currency and weather all having a part to play. As a potential Greek deal nears, a strong euro and talk of dryness in parts of southern Europe have added to the firmer sentiment in recent days. At the time of writing the MATIF wheat market is up circa €4 on the week.  

In the UK old crop physical prices remain resilient but new crop has been helped to some degree by the weakening pound. Fundamentals still point to a large carryout stock and a good wheat crop next year, This, combined with a lack of competitiveness into traditional export homes, could push prices lower.

In conclusion, a combination of jittery fund shorts, weather stories, European politics and currency have all had an important part to play in the recent rally. Adequate global stocks and good crop ratings are still likely to weigh on the market, and unless we see a major weather or significant macro-economic event the downward pressure on prices could increase the closer to harvest we get.  

UK farmers, for understandable reasons, have probably sold less at this time of year than for many years and the time window for a dramatic turnaround is narrowing, but is not closed yet.