David Sheppard, Gleadell grains’ managing director, recounts the latest ups and downs in the wheat market.

Market fundamentals have showed signs of returning to the markets, with prices firming £5 over the past week. The recent rally on gold seems to have ‘lost its shine’ as prices have fallen over $100 from the highs of this week. The political news regarding Libya seems to have supported the markets and, with potential US FED intervention to purchase the US debt, has weakened the US$, supporting commodity prices.

US crop conditions continue to decline, with traders now looking at potential further cuts in US corn and spring wheat yields, thus tightening an already tight US supply and demand scenario.

Continued rain across France and Germany is resulting in a greater percentage of wheat being downgraded to only feed quality, which is contrary to the Ukraine, where the proportion of milling wheat in this year’s crop has been increased to 70%, from last month’s estimate of 60%.

The UK harvest progresses slowly north, as farmers try and get wheat cut in between the showers. Quality remains good to date. 

In summary, it remains a mixed bag – less milling quality and increased feed quality in some parts of Europe, with the potential of increased quality volumes in the Ukraine and Russia.  Russia continues to ‘knock over’ Egyptian tenders, albeit at more money as the markets firm.  Global economic woes are still hovering in the background, so any negative news will cause profit-taking across the commodity/equities markets.