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May London wheat closed up £1.80 yesterday as London reluctantly followed firmer U.S and European markets.
U.S wheat markets unexpectedly rose due to weather concerns making shorts nervous; funds are at shortest position on wheat since May 2014. U.S plains did not receive the expected rain, dry conditions persist.
Dry and cold weather is forecast for the Ukraine and Russia over the next two weeks, this will threaten poorly established plants; eastern Europe is generally experiencing dry conditions.
Russian winter plantings is 90% + complete but Ukraine is behind planting; revised winter area 5.8 m hectares against 6.7 m hectares (2015 crop).
2015 Ukraine wheat crop was 24.2 mmt; reduced area could see this fall to 19 mmt, although unplanted areas could be replaced with spring crops e.g corn.
E.U markets helped by weaker Euro and further Chinese rate cuts have led investors to look to the $ and £.
Iran, a big wheat exporter, announced it will sell 400,000 tonnes as increased domestic buying has swelled stocks.
Oil prices remain under pressure.author: Joe Beardshaw