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

US markets continue to consolidate, with the reversal of the March 2nd low now reaching 30c/bushel (£7.60/t). Continued concerns over dryness in the key winter wheat areas, and flooding which is seen delaying or even losing acres to corn plantings, has resulted in bouts of short-covering.

Although improved weather is forecast and talk of overbuying sparked some selling last night, all this encouraged was further buying interest. US prices remain heavily overpriced, and with exports running well behind last year, the fundamental outlook is still bearish.

EU prices are up €2 on the week, mainly following the US market. Farmer retention, both in the EU and Black Sea is seen supporting the market, especially with a busy current export program. French supplies managed to grab the major share of the recent Egyptian tender, but with a competitive price offered and issues remaining over payment/quality, it seems a risky trade. EU exports are 15% lower year-on-year, and French new crop is reported as being 93% good/excellent condition.

Despite a firmer feel to the UK market, LIFFE and physical delivered prices are virtually unchanged on the week. A hefty pick up in exports in January was reported, and at 310,000t brings the season-to-date total to 1.3mln t. Whilst this scale of exports should continue through February and March, the outlook is less secure in the latter months (April-June).

In summary US markets are up on weather/short-covering, non US cash markets are trying to buy demand – long-term supply fundamentals are still bearish! US crop rating and planting progress reports will commence in April, confirming or dismissing the current weather uncertainties. For the long haul it will be the prospective planting and first March stock reports issued on the 31st that will be the next major driver. If they confirm the numbers from the outlook forum, long-holders will be left looking for a major weather issue to justify their position.