US prices are down on the week, as the market continues to struggle with the slow pace of US sales and exports. The slow pace of this year’s soybean harvest is seen delaying the final 10% of winter wheat acreage to be planted in the Southern Plains, although this week’s rise in crop ratings is offering resistance. Concern over final southern hemisphere wheat crops still provides a level of support, albeit the trade is still awaiting signs of additional demand coming into the US export book.
European prices, also down on the week, are mainly reacting to euro/US$ currency movements. EU exports remain sluggish, now seen down 27% y/y (non-EU soft wheat), although talk of lower yields, and more importantly, quality concerns relating to the Argentine wheat crop, may provide a reprieve for French exporters at the next Algerian tender. Due to the uncertainty, it is expected that traders may shy clear of offering a volume of Argentine wheat until more details are known regarding the actual quality of the crop. Talk is also increasing regarding Russia and whether domestic usage is being underestimated, as it appears export quality grain is becoming harder to source. This may be of relevance, as today GASC (Egypt’s official buyer) has issued a buying tender, which due to the US being closed, seems a surprising day to tender!
UK prices are slightly higher on the week, despite slightly better sterling values. Seasonal logistics are starting to kick in as consumers start to issue fixings, with the physical market seemingly short of December wheat, with offers few and far between. However, Brexit remains the main driver for wheat prices (currency movements), as the political declaration outlining how trade, security and other issues will work has been ‘agreed in principle’, and is expected to be signed off at this weekend’s EU summit. The Prime Minister will then turn her attention to getting the deal through parliament.
In summary, markets continue to move sideways, and there appears little to change the current trend in the short-term. Long-term fundamentals factors still provide support, but that won’t concern US traders today as they prepare to enjoy Thanksgiving!