Wheat futures markets continue to trade within the recent range, with little to suggest that they will break out either way at present. Egypt’s GASC import agency bought 175,000t of Russian wheat at its recent tender and paid $10/t more than in the previous one. The higher price was mainly linked to increased freight costs and to sellers building in a risk premium, as the risk of rejection for issues such as ergot and poppy seed admixture represents a serious potential cost.
In Canada and Australia crop sizes are being downgraded, whilst in Russia the crop continues to grow and capture most available export business that will take Russian wheat.
In Europe, German wheat is struggling to find export outlets, and whilst French wheat is more competitive than a fortnight ago, it still remains difficult for French wheat to buy any significant demand. In short, the EU exportable surplus is building and not being shipped.
In the UK, harvest is still not complete, albeit less than 5% remains to be combined. Sterling seems underpinned after its recent rally and UK wheat is not competitive for export. It is evident that we will be a net importer again this season. Regional feed wheat prices vary greatly and quality premiums depend on who wants what and where they want it. It does appear that nationally there is enough wheat of milling quality to satisfy demand, but there might not be enough in certain regions, which means that wheat will have to travel further than normal to fulfil this demand. This is a particular factor in the central south and south-west milling wheat markets.