David Sheppard, Gleadell’s Managing Director, comments on the wheat markets

The USDA stocks and acreage report is due out today, Friday 28^th June. Old crop stocks of corn are expected to be tight, although ‘how‘ tight will be a key factor to watch.

In Europe crops continue to mature, or in the east to be harvested, satisfactorily and even in the UK wheat crops are reported as having much more potential than expected. Farmers in eastern Europe are starting to market crops as harvest gets underway, but in western Europe farmers are generally not selling and hoping for a bullish surprise to turn the market around.

This may, or probably more likely may not, come from the imminent USDA report – but if this does not happen it is unclear where the turnaround factor is going to come from, unless we see a late dramatic weather event.

In the UK, old crop futures have moved to a hefty discount to new crop reflecting  large carry-out stocks. The old crop market has now fallen approximately £65/t from the highs and new crop has fallen by around £35/t.

Whilst new crop prices are significantly lower than the levels seen only 4-6 weeks ago, they are still worthy of serious consideration in the light of a generally bearish outlook. 

Summary

• Harvest continues to move north in the US with reports of better yields and quality. Spring wheat conditions are reported as improving with drier weather forecast.

• In northern areas US farmers have continued to plant corn later than ever as better weather forecasts enable land work to continue. This planting is not covered by government-sponsored crop insurance.

• There is some continuing talk of quality issues with the Chinese wheat crop. This news is perhaps supported by recent purchases of US and French wheat.

• Harvest has started in eastern Europe and Russia, with reports of much better yields than in 2012.