The US market has risen up about $6/t on the week as the weather takes centre stage. Reports of extensive flooding due to melting snow, which is expected to worsen with more rain and snow in the forecast, have raised fears of spring wheat losses and delayed sowing of other spring crops. The upward move, led by MGEX hard red spring wheat futures, has dragged the Chicago market higher as weather premiums continued to be built into market values.
EU prices have also stabilised on the global bounce, moving up €4/t on the week, as a further strong vessel line-up provides underlying support. Exports of soft wheat to non-EU destinations are now reported only 11% down year on year. France, Germany and the Baltic states are well placed to maintain their hold on further international tenders, while the recent surge in the euro and the expected rebound in EU wheat production for 2019 are keeping prices in check.
UK prices have also moved higher, partly following the global trend and partly due to a pound weakened by the ongoing Brexit confusion. Fundamentally, it appears that the UK will have sufficient supplies for the current season. Domestic wheat usage is waning due to increased volumes of imported maize, and the likelihood that imports will be available at zero tariff. Current prices look attractive to growers, especially considering the expected drop into new crop.
In summary, fundamentally little has changed, but weather issues seemed to have stepped up a gear. The trade is aware of the fund position in the US market, although there is very little regarding old crop market dynamics to encourage them to change their stance. US wheat is going nowhere, and even if a US/Chinese deal were to be announced, it would probably be too late to dramatically alter the US balance sheets. This leaves the weather as the short, medium and long-term driver for a market where demand continues to be of great concern.