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

As the marketing season draws to a close in the US, initial crop ratings on spring wheat and corn have been pegged lower than trade expectations.  

Spring wheat ratings, at 62% good/excellent, are down from 79% a year earlier, although that figure declined during the growing season and into the harvest.

Early results from the hard red winter (HRW) wheat harvest would, if continued, confirm industry fears of a second consecutive season of low proteins. That places greater emphasis on North American spring wheat crops, which are mainly of higher protein varieties.

Egypt issued its first international tender of the 2017-18 marketing season, procuring 180,000t of Romanian/Russian wheat. Purchase prices carried a high premium over harvest quotations, mainly due to changes in the contract specification and local Russian VAT issues.

EU prices are unchanged on the week, along with the euro/US dollar rate. The main focus was on the Egyptian tender, which seemed to confirm that Egypt’s state buyer, GASC, was willing to pay for its revised higher-protein contract specification.

A cargo of French wheat was offered, but a $10/t premium was passed on, as many believed that, with Egypt’s minimum 12% standard, France wouldn’t be a player for this season.

Coceral brought its EU-28 2017 soft wheat production estimate down in line with others to 142mln t, compared with its 144.8mln t initial outlook in March.

UK prices are marginally higher on the week as sterling continues its slide on a narrowing of the government’s lead in the opinion polls.

Old crop values continue to ease as long-holders seem more willing to offer supplies, although in some parts of the country, the apparent shortage of farm supplies means some are reluctant to start chasing down offers.

In summary, old crop is all but over, and market focus is all about weather and new crop prospects.  Impending harvests will make short-term rallies difficult to sustain as the world still has plenty of wheat, although new crop quality fears are starting to intensify.