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

Harvest activity in the UK has increased amongst the showers and yields are widely reported as significantly better than in 2016.

However, the fact wheat is becoming available in the east and parts of the south, which can be trucked northwards, has eroded spot premiums in most areas. Only the far north and west destinations are still able to achieve sizeable, but smaller premiums.

UK wheat quality is a hot topic at present with some reports of Hagbergs starting to decline.

Prices remain uncompetitive for export and if yields continue to be good we will need to get competitive at some stage.  

UK prices have weakened overall, reflecting lower EU and global values. They have traded down about £4/t since the end of last week, and down more than £10/t since the middle of July, when markets spiked.

The US market continues to see fund long liquidation, mainly on spread trading between Chicago, and Minneapolis.

A benign two-week weather forecast is also seen as a negative factor, as was the surprising improvement in this week’s US soyabean crop ratings, which caused a strong sell-off, spilling over into the corn and wheat pits.

Traders continue to trade short-term weather, although a lower US dollar, a long-term forecast that still shows warmer conditions in the Midwest and the expectation of a significant cut in corn yield in next week’s USDA report could provide support.

EU prices have followed the global markets lower, and more. MATIF has broken through the 12-month low on Nov17 set in March, meaning that in the past four weeks we have witnessed the 12-month highs and lows of the market, representing a movement of just over €20/t.

Weakness has come mainly from the surge in the value of the euro, trading around a two-year high, the slow pace of EU exports (although still very early in the season) and reports that Russia’s 2017 crop estimate is slowly getting bigger.