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

Despite fund shorts cutting their current exposure considerably, US markets have slipped back during the past week, trading $3 lower. Pressure has come from a firmer US$, after Fed official comments suggest an April rate hike remains still possible, and improving crop ratings and more favourable weather in the forecast for the US plains.  Wheat exports picked up last week, but are still 13% down on the year and with no sign that sales and export will increase dramatically, given the huge premium held by US supplies, stocks are still likely to rise further.

EU prices are slightly firmer, up €1.50 on the week. Talk of farmer retention and an improved French shipping line-up account for the rise. News that Lebanon is filing a case against Russia due to a contaminated imported wheat cargo, passed without a murmur. French new crop wheat rating slipped a percentage point on the week, but are still above last season. With most of Europe on holiday this weekend, the timing of today’s Egypt tender may cause some ripples, although as in recent tenders, offers carry a risk premium given that the ergot tolerance issue has not gone away.

UK prices are unchanged on the week, although spot delivery premiums have edged up slightly as trade buyers are met with farmer reluctant to sell before the Easter break/new tax year. Sterling continues to weaken, being pushed and pulled between movement in the US dollar and the euro, and this week’s dreadful events in Belgium.

In summary –if any conclusion can be deemed, the improvement in crop conditions the US is a bearish factor. With the Easter weekend upon us, and a new tax year about to start, farm selling may be limited. All eyes are on next week’s USDA reports, although many believe that the numbers reported will not differ greatly from the outlook forum, and just confirm too much supply, not only for 2015/16 but also 2016/17. The weather still remains the key to US spring planting, but without an issue, one would argue why buyers should pay more, given more supply.