GLOBAL - Despite a forecast rise in global stocks, US markets have resumed their upward trend, supported by strength from neighbouring soy and corn markets, writes David Sheppard, Gleadell’s managing director, comments on the wheat market.
In addition, the arrival of the first major winter storm in the US plains, along with an expected cold blast, has lifted concerns for recently planted US winter wheat, especially with a general lack of snow cover to protect young plants. And reports that Ukraine was redeploying troops in the east seem to have introduced a political premium back into markets as tension escalates.
EU markets continue to trade under the spectre of limited farm selling and a weaker euro. Winter wheat sowings are almost complete, with both Russia and Ukraine increasing their winter grain area compared with last year.
While reports place 83 per cent of Ukraine’s wheat crop in good condition, concerns remain over dryness in parts of Russia with looming colder weather expected to stress crops. Farmers remain reluctant to sell grain although the fall in the rouble actually increases the value of export wheat.
In the UK it appears that the festive break has started early as a marked pick-up in demand has done little to encourage farmer selling. Farm prices continue to find support and, with producers unwilling to chase the market lower, the likelihood is for further gains, especially in the spot position.
The UK remains a net importer, with official estimates placing exports to end-September at about 300,000t, compared with imports at 600,000t. With the recent rally the UK has lost some of its competitiveness and, with an exportable surplus of about 3.5mln t, the likelihood remains for an above-average carry-out in wheat stocks.
It's that time of the year – bulls talking of colder weather killing crops and bears saying it’s winter, it’s supposed to be cold, and asking where do all the EU and US wheat supplies go? Black Sea currency problems will not support a build-up of stock – and the recent market driver has been from other markets.
Supplies of corn and wheat are more than plentiful as confirmed by the USDA this week, but until the soy complex trades normality, grain market fundamentals are meaningless.
TheCropSite News Desk