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

The US market is $3/t higher on the week as commodities got another boost from weather concerns and start-of-the-month money flow.

Excessive rain in the US plains has increased concerns over potential quality issues, although a drier forecast should support wheat development and harvest progress, which has commenced in the southern plains. Early reports have yields better than expected, but with protein level a possible issue.

MATIF values are up €1.50 on the week. Yesterday’s sharp US rally, which followed a bigger down day the previous day, now places French wheat $15/t below US soft red winter wheat.

As in the US, current weather in parts of Europe is not favourable, with wet conditions across much of France and Germany moving east into the Balkans and southern Russia. This, together with forecasted warmer temperatures, could increase disease potential in crops.  

France’s export line-up remains strong with shipments to Asia, where feed wheat is currently undercutting maize prices.

UK LIFFE values are up £2 on the week, mainly supported by a weaker currency. After the surge last week, sterling has since slipped 2% due to recent opinion polls showing a rise in those favouring a leave vote in the upcoming EU referendum.

New crop values have firmed as a result, leaving end-users unwilling to extend what little cover they have on the books. Old crop values remain static, oblivious to currency, weather and anything else you throw at them, as end-users and merchant shorts stand stubbornly behind their bids.

In summary, wheat fundamentals remain bearish – support is being driven from firmer soy, corn, money flow and potential quality issues. It is still too early to define whether current weather will have a major impact on quality or yield, but the potential of more ‘feed’ in an already over-supplied feed grain scenario will do little to support cash values – futures are another thing.

However, as we have witnessed for most of this season, cash markets become disconnected from the futures markets and you can’t argue against the same happening next season.