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London old crop closed down 70p and new crop up 20p making May – November differential £9.00. Part of the reason for this contrast is sterling strength, it is provoking wheat imports into UK; 3000 tonnes French wheat loading following last week’s 4000 tonnes. Both Ensus and Vivergo are placed to take imports; Ensus can also use corn as well. UK supply / demand remains tight and any harvest date will be important.
New crop supported by continued dry weather concerns with parts of Europe only having 30% normal rainfall, North Africa is dry (Algeria , Morocco) having had no rain for last 30 days; rain prospects are limited for the next 10 days.
Heavy world supplies do offer insurance against weather threats, Black Sea exports are below expectation and therefore increasing stocks; Russian and Ukraine wheat production for 2017 crop will down due to weather, yield closer to normal and lower area.
US markets much weaker, Kansas wheat reaching new lows; recent rains have removed the dry threat that existed 1 month ago. Conditions for corn and soya planting are good, further helping the bearish sentiment, but this would be 5th good US harvest in a row, if conditions continue.
Canadian wheat area is down 3.7%; growers have switched to alternative crops such as canola, this is thought to be a reaction to low wheat prices.author: Joe Beardshaw