David Sheppard, managing director at Gleadell offers insight into this week’s movements in the wheat market.

Markets continue their trend to drift lower as global economic concerns and euro-debt worries weigh on prices. Lack of exports from the US/EU due to increased competition from the Black Sea is increasing the likelihood of stocks increasing. Domestic demand continues to slow with mild weather reducing requirements for animal feed.

The lack of fresh fundamental support, over and above the current global worries, is seen as negative to prices. Corn and wheat prices continue to drift trying to encourage buying interest, but all this is achieving is lowering the prices within the Black Sea, keeping the status quo the same. Could be down even from these levels.

• Ag Canada sees 2011/12 all-wheat production at 24.16mln/t, up from 23.17mln/t in 2010/11.
• Egypt’s GASC continues to purchase Black Sea wheat – purchases to date now at just under 4mln/t.
• EU may extend zero import duty on feed wheat and barley until June 2012 – currently in place until 31 December 2011.
• Australian harvest accelerates in the East, although some rain delays being experienced in NSW. Quality issues may arise if this continues.
• Ukraine plan to sow an additional 2mln ha of spring grains to compensate winter crops affected by poor weather.
• EU wheat continues to fall on gloomy economic outlook and export competition.
• Analysts see corn prices returning to over $7/bushel due to ‘tightness in supplies’.
• Ukraine winter crops continue to suffer, affected by dry weather/poor conditions during sowing period.

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