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

The pure market fundamental of oversupply meeting limited demand remains the major factor affecting the global wheat market.

US wheat, which remains over-priced on global export markets, continues to struggle to attract buying interest. Current export inspections for the first quarter (June-August) are running 23% lower year-on-year.

There are some questions over supply. There are valid concerns in Australia over the El Nino weather phenomenon, which could threaten the wheat crop, and the Argentine wheat area is much reduced due to adverse weather and political meddling (export licences). In Russia, uncertainty over the tax system could restrict offers of export wheat in the deferred positions.

EU wheat markets have been, and will continue to be, pressured by rising production and slow export demand, as a result of very aggressive pricing from the Black Sea and Baltic regions. This is mainly due to increased production and increased stocks from the previous season.

French wheat is losing out to Egypt and North Africa as other origins undercut values. French MATIF silos are still closed for intake due to the lack of export demand.

The UK market is now starting to trade harvest pressure as increased supplies hit the market. Domestic demand remains very lacklustre, leaving spot prices trading at a substantial discount for guaranteed movement.

Parts of the country are only just restarting harvest, so price pressure could continue for several weeks. The UK remains uncompetitive on export as FOB prices fall in line with cheaper origins or potential buyers reduce buying ideas as global markets weaken.

The quality of what remains in the field is a concern and could potentially add to the feed grain surplus.

It still remains tough to see any substantial upside to wheat. Although fund shorts may again provide the odd blip higher, markets remain bearish with wheat moving lower looking for demand.