Quantity keeping wheat prices down while OSR prices dictated by politics

As the marketing season draws to a close in the US, initial crop ratings on spring wheat and corn have been pegged lower than trade expectations, says Gleadell managing director, David Sheppard.

“Spring wheat ratings, at 62% good/excellent, are down from 79% a year earlier, although that figure declined during the growing season and into the harvest.

“Early results from the hard red winter (HRW) wheat harvest would, if continued, confirm industry fears of a second consecutive season of low proteins. That places greater emphasis on North American spring wheat crops, which are mainly of higher protein varieties.

“Egypt issued its first international tender of the 2017-18 marketing season, procuring 180,000t of Romanian/Russian wheat. Purchase prices carried a high premium over harvest quotations, mainly due to changes in the contract specification and local Russian VAT issues.

“EU prices are unchanged on the week, along with the euro/US dollar rate. The main focus was on the Egyptian tender, which seemed to confirm that Egypt’s state buyer, GASC, was willing to pay for its revised higher-protein contract specification.

“A cargo of French wheat was offered, but a $10/t premium was passed on, as many believed that, with Egypt’s minimum 12% standard, France wouldn’t be a player for this season.

“Coceral brought its EU-28 2017 soft wheat production estimate down in line with others to 142mln t, compared with its 144.8mln t initial outlook in March.

“UK prices are marginally higher on the week as sterling continues its slide on a narrowing of the government’s lead in the opinion polls.

“Old crop values continue to ease as long-holders seem more willing to offer supplies, although in some parts of the country, the apparent shortage of farm supplies means some are reluctant to start chasing down offers.

“In summary David said: “The old crop is all but over, and market focus is all about weather and new crop prospects. Impending harvests will make short-term rallies difficult to sustain as the world still has plenty of wheat, although new crop quality fears are starting to intensify.”

In addition Gleadell’s trading director, Jonathan Lane said that Rapeseed prices on the Matif contract fell sharply again as Chicago soy prices tumbled, but politics at home had helped soften the fall.

“Imports of rapeseed into the EU will exceed previous forecasts and this, combined with lower crush demand, will result in higher than expected ending stocks. Old crop Australian imports are likely to still be arriving as European farmers start to harvest the 2017/18 crop.

“UK farmgate prices have been cushioned by the sharp decline in sterling due to the prospect of a hung parliament or a Corbyn government.

“The global view on oilseeds remains bearish and if we see Mrs May elected with a sizeable majority next week we could expect to see a recovery in sterling, which would undermine our domestic prices.”

In short politics and currency swings continue to be the key driver in the UK market.

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About The Author

John Swire - Editor of Agronomist and Arable Farmer as well as responsibility for the Agronomist and Arable Farmer and Farm Business websites. After 17 years milking cows on the family farm John started writing about agriculture in 1998 and has since written for a variety of publications and has developed a wide circle of contacts within the industry. When not working John is a season ticket holder at Stoke City and also of late has become a fitness freak, listing cycling, swimming and walking as his exercises of choice.