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

Markets have consolidated over the past week and are trading in a narrow range.

The USDA report on Monday estimated US corn yields at 174.4 bushels/acre, below the August estimate but above analyst expectations. World wheat end-season stocks were trimmed slightly, but at 249 mln t there is no shortage.

The latest Algerian tender resulted in purchases of around 700,000mt. There is a variety of potential origins to supply this tonnage – the US, France, the Baltic countries, Germany and the UK to name a few. UK wheat looks relatively competitive, but the minimum requirement of 78 kg/hl (with allowance to 77kg/hl) may be an issue.

UK prices are supported in the short term by merchants who need to buy to cover September sales – not a pleasurable or profitable experience for the merchants concerned, but a self-inflicted one.

The prices they are having to pay are really November or December values, and therefore represent a decent selling opportunity for farmers who can spare the time to hop off the combine or drill, load some grain and put some money in the bank.

Looking ahead, with Southern Hemisphere crops looming on the horizon, and getting bigger, the weight of global supplies overhangs the market. However, the fund short position in Chicago remains an important factor. Some day they will have to buy back their record short position.