US Chicago market has seen continued fund long liquidation, trading down almost $15/t on the week. Spread trading (selling Chicago and buying Minneapolis) has kept the quality wheat market firm, supported by ongoing dryness concerns and deteriorating crop ratings.
EU markets are also weaker, trading down €7/t on the week. French wheat harvest continues to move northwards, with 30% harvested a/o 10th July. Harvests have also commenced in the Black Sea region after rains caused a significant delay, with yields reported higher in Russia, but lower in the Ukraine.
With Russian yields better than anticipated, estimates for the 2017 grain crop have been raised, with analysts now seeing the current wheat crop matching, or even exceeding, last season’s record. However, the strength of the ruble continues to limit farmer selling, pushing up export prices at a time when exporters are executing large volumes of export sales. EU weather maps keep rain across much of Germany, Poland and the Baltic states, meaning uncertainty over final yields and quality.
UK prices are trading almost £5/t down on the week, following the other exchanges. Harvest has commenced (rape seed and barley) with the odd reports of early wheat being cut, although the rain may curtail activity over the next couple of days. The trade is waiting to see what they are dealt with quality wise from this year’s harvest.
In summary, uncertainty remains over production of the higher quality wheat in the US, Canada and Australia, while rains may yet impact upon quality within the EU.