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

Despite a firmer US dollar and a bearish export outlook, Chicago wheat values have manged to gain $2.50 on the week. The release of the CBFT report showed fund managers shorter than anticipated, which has supported the small rise.

Although a better week for US exports, these were still behind the average needed to achieve the USDA projection. Import demand is expected to slow as the harvest approaches, so the likelihood remains that US stocks will increase further.

In the EU, the Matif is down €2 on the week, pressured by a very bleak export outlook. There is still a level of uncertainty regarding Egypt, and although that country’s agriculture ministry sent an official letter confirming 0.05% ergot tolerance, nothing has been confirmed from the quarantine office.

Even with a better shipping line-up this week, crop bureau FranceAgriMer has reduced its non-EU export projection, lifting French soft wheat closing stocks to a 17-year high of 6 mln t.

UK markets are up 50p on the week, continued to be driven by short covering, mainly by shippers. Spot-delivered premiums continue to rise as demand intensifies into an apparent ‘supply squeeze’, although in the deferred positions demand remains absent.

While the spike has supported firmer ex-farm prices, the need for the UK to stay competitive would justify a retracement from current levels. Importers will become more relaxed as harvests near and export competition is expected to increase.

In summary, less gloomy economic reports coming out of China and Japan have triggered a small bounce in most markets – equities, commodities and crude oil. Knowledge that the US funds are also shorter than initially thought leaves the Chicago market open to technical support, although global markets are past caring what the US does.

Fundamentally nothing has changed, there is still too much supply chasing too little demand, but that doesn’t seem to be the fact if you need to buy some spot wheat.