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

The USDA did what was expected, adjusting domestic demand to accommodate the stock numbers and adopting recently revised acreage numbers, but leaving yield projections unchanged.

The market is now split, with bulls believing the acreage/yield numbers are too optimistic while the bears point to the demand/export numbers being overstated. At this time of the year the market is only as good as the latest weather forecast, and with drier, warmer weather to return, and crop ratings remaining stable on the week, this was enough to encourage the long-holders to offload and bank profit after the recent surge in values.

EU markets have weakened despite another EU bailout, and no Grexit, Ongoing harvests and a limited vessel line-up is starting to apply pressure on markets, not helped by the fact French wheat was $25/t out on price at the latest GASC tender.

More reports of potential quality issues on Russian wheat (due to rain) are being circled, and no Ukrainian wheat was offered to GASC, which again could be on quality issues.

UK markets have also weakened on the week. The old crop/harvest price spread has eroded, and with currency soaring on the back of the Greek bailout, export supplies remain uncompetitive. Domestic demand remains slow with end-users generally unwilling to extend coverage, while growers remain reluctant sellers as the market retraces from the recent high.

In summary the USDA came and went, and left as many questions as it answered! Trade focus will remain weather-fixed over the next few weeks. The next USDA report in August could produce some fireworks, as lower yield projections and potential acreage adjustments are expected – with the severity of the expected cuts providing the stimulus for market strength.

While there remains a story for corn and soybeans, the reality is the US export program already running 32% behind last year, US wheat stocks are seen approaching 900mln bushels, and global stocks almost 220mln t. This provides wheat, and especially US wheat, with no story, unless either corn or soybeans writes the first chapter!

• Global markets weaken on improving weather that is seen aiding crops in key US corn growing states.
• Brazil’s food supply agency CONAB raises Brazilian 2015 wheat harvest estimate to 7.01mln t – reduces import needs.
• Egypt’s state buyer GASC purchases 235,000t of wheat (120,000t Romanian/115,000t Russian) for August 20-31 shipment – French wheat $25/t too expensive.
• No Ukrainian wheat offered at recent GASC tender – Ukrainian feed wheat is currently offered cheaper than EU corn.
• US agri-statistics service NASS reports corn crop ratings unchanged on the week (9% v poor/poor, 22% fair, 69% good/excellent) – down from last year’s (5%, 19% and 76% respectively).
• NASS report spring wheat crop ratings up 1% on the week (6% v poor/poor, 23% fair, 71% good/excellent) – marginally above last year.
• Buenos Aires Grain Exchange reports wheat plantings 82% complete (on revised area of 3.75m ha, down 20% year on year).