Despite US export shipments still being reported 13% down y/y against a perceived 11% increase, the market has gained $5/t on the week. Support is seen coming from reports that the US managed a share of this week’s Algerian tender. Although freight disadvantage meant the US missed out on Egypt, the fact US (on a fob basis) was the cheapest offered, added to the trade optimism. In addition, continued concerns over declining prospects in Argentina due to excessive rains and talk that US farmers may have planted a record low winter wheat acreage helps to underpin the US market.
European markets are unchanged on the week after initial strength, due to the rise in both US and Russian export prices eroding. After missing out on the previous tender, Russia managed to secure all of this week’s Egyptian tender, selling 415,000t of late February/early March shipment wheat. With Russia offering four times the volume traded in the March shipment period, European traders are becoming more concerned that the potential of any substantial increase in EU export demand is receding. In its monthly update, France’s farm ministry slightly lowered its projection for French non-EU soft wheat exports by 100,000t, raising ending stocks by the same amount, to 2.8mln t.
The UK market continues its early new year lacklustre approach, with futures continuing to trade in a very narrow range. Eyes and ears are on the current Brexit debate in the Commons, and with the recent government defeats, the outcome is looking increasingly uneasy for the Prime Minister. The latest vote lost means that ministers will have to come up with revised plans (so-called Plan B) within three days, rather than the three weeks previously agreed in law, if the PM’s EU withdrawal deal is rejected by MP’s next Tuesday.
In summary, the US market currently looks to be underpinned, although key USDA production, stocks and planting data will not be issued this Friday due to the partial shutdown of the US Government. European markets are reeling due to the continued slow pace of exports, and the likelihood that both the length of Russian exports, and key importer cover are both increasing. In the UK, Brexit continues to rule and, with the outcome likely to cause much reaction in the financial and economic sectors and the impending influence upon sterling, it is no wonder that both farmer selling and consumer buyer has slowed, with many waiting for the result and then trying to determine what it all means.