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

US markets continue to tumble, hitting fresh contract lows in Chicago and Kansas City on Wednesday.

Funds have now gone short in Chicago after liquidating their long Minneapolis position.
 
Weather remains favourable for spring corn and soy crops, with adequate moisture and average temperatures.

The US winter wheat harvest is complete. Over 50% of the spring wheat crop is expected to be cut through this weekend, limiting further crop damage, although crop ratings remain dire.

European markets remain pressured by weaker global markets, falling another €4/t on the week to hit a new contract low (Matif Dec17 €162.25). 

The harvest in France is virtually complete and quality has improved. Delays continue in Germany, Poland and the Baltic and concerns over quality are rising.

The likelihood of more EU feed wheat and increased production in Russia and Ukraine are seen as negative to EU prices, although logistics may limit the total volume of Russian exports.

Black Sea supplies again filled Egypt’s latest tender, with five Russian cargoes booked out of 15 offered. The solitary French offer was about $10/t too expensive.

UK prices are about £3/t down on the week, despite a weaker pound. The current UK harvest remains variable, with good progress in the south and east, but limited activity in the north and west.

Yields and quality seem to be a mixed bag, with regional differences. The weather premium in the north and west of the country has now been eroded as local supplies start to increase.

In summary, with US and EU markets hitting new contract lows, markets may adopt a period of consolidation, especially now funds hold a short position.

However, UK prices may drift lower if harvest pressure develops, although the potential of a weaker pound could provide long-term support.