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

Chicago wheat is unchanged on the week, following Tuesday’s bearish USDA report.

USDA put 2015/15 global end-of-season wheat stocks at 242.9 mln t, marginally above estimates and an increase of 28.1 mln t year on year. The report also predicted that the 2016/17 figure would reach a record 257.3mln t.

Despite recent rallies in the US, the European wheat market has remained resolutely stubborn and seen little upside.

The weight of end-of-season EU stocks continues to bear down on new crop and in particular the harvest period, with aggressive prices being offered across the board.

The USDA report reduced production of new-crop EU soft wheat, marking it down by 3.51mln t compared with this season. However, a combination of historically high starting stocks, lower total domestic usage and a normal export figure means ending stocks could increase from this season’s already large figure. France and the UK are seen as the main contributors to the latter, holding over about 5 mln t and 3 mln t respectively.
 
Exports struggled to find demand earlier in the season, with strong competition coming from the Black Sea and Argentina. Now, weekly licenses continue to be issued at a relatively strong rate for the time of season, but not enough to make a dent to the sentiment of over-supply globally and in Europe.

LIFFE May16 is down £1/t on the week at the time of writing, keeping in line with the general global and European markets. Delivered markets, though, have gained as much as £1/t in northern regions, while the south has stayed flat due to reduced export and domestic demand.