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

Declining winter wheat crop ratings, a near stop to US spring plantings and a dry weather forecast for hard red winter wheat areas in the Southern Plains have provided support to the US market.

Traders will continue to trade weather and, with adverse conditions forecast that will keep producers idle till until late April, the market should remain underpinned.

US wheat remains uncompetitive in the export line-up, with export inspections seen running 10% down year on year and behind the pace needed to achieve USDA’s projection.

Paris wheat is trading €1.50/t down on the week, with French cash premiums easing, despite the ongoing rail strike which is causing some logistical issues. 

EU third country exports continue to lag last season. These are now seen 23% lower year on year at 15.4mln t, based on weekly EU Commission numbers to date and an estimate for the balance of the season. That leaves USDA’s current all-wheat export projection of 24mln t looking highly unrealistic.

Russian export prices continue to firm. The demise in the rouble sees producers retaining grain from export markets, leaving traders frantically chasing supplies to meet export requirements.

London wheat is valued about £3/t higher on the week, with new crop £1/t higher.

Despite the recent slip in currency, due to a lower-than-expected inflation rate reducing the likelihood of a May interest rate increase, UK wheat values are at import parity. This will encourage imports of feed and milling quality wheat during the last quarter of this season.

As in most of the northern hemisphere, UK farmers should be able to recommence spring sowings this week, as an improved forecast hopefully dries up sodden fields.

Gleadell comment

In summary, the market movement in Chicago is about as good as the next weather forecast, up if rain is taken out, down if added.

The adverse US conditions will again keep sowings to a minimum this week. Although too early to sound the alarm bells, if the pace hasn’t substantially increased by the beginning of May some spring wheat and corn acreage could be lost to soybeans or left unplanted.

Both these scenarios would provide some support to the US markets, which would probably translate across the pond.