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

Global

We await today’s USDA report with interest. Early reports from the US corn harvest suggest yields are lower than expectations, but it is early days and the numbers published by the USDA will be what the market reacts to.

We are awaiting news of any potential changes to Russia’s export tax. There are some rumours that the rules could be relaxed, simplified or even removed. El Nino doesn’t appear, to date, to be having the devastating effect on Australian crops that pundits predicted. However the next six weeks are crucial.

Europe

EU crop estimates are getting bigger, with France reporting a record crop of 40.7 mln t. Farmer retention is the name of the game across most of the EU as farmers and co-ops stash large crops into any available storage space to avoid taking current prices.

The fundamentals (supply and demand) of the market don’t support this as a sensible marketing strategy – it relies on the ‘something will turn up’ factor to see it pay off. Whilst this is happening, international tenders are being captured by Black Sea and Russian supplies.

UK

The UK wheat harvest has rumbled onwards this week with some deterioration in quality being seen, especially Hagbergs. However, we feel enough good quality wheat is in the barn to keep quality premiums at or around current levels.

Export / import figures were released for July which showed the UK was a net importer, in July, to the tune of 60,000t. New season wheat exports remain difficult, to say the least, and the challenge of removing a part of our surplus is with us for the foreseeable future.