US wheat is trading $3-4/t down on the week as the market continued to be pressured by disappointing exports, still reported as 10% down year on year. However, severe cold weather concerns, the likelihood of record low winter US wheat plantings and cautious, but perhaps misplaced, optimism over the current US/China trade talks helps to keep the market bulls interested. With the US government slowly returning to work, key stocks and planting data delayed this month will be published on Feb 8th, and the re-commencement of sales data will provide an insight into any expected increase in US demand.
European prices are unchanged on the week, although France’s export outlook got a boost this week when it managed to secure some of the Egyptian tender. Prices showed that Russia had completely priced itself out of the export market, confirming the agriculture ministry’s latest export projection, which while keeping total exports at 42mln t, trimmed those of wheat to 36mln t, from 37mln t previously. With Romania (which also shared the Egyptian tender) close to running out and uncertainty on what export volume is left in the Baltic states, this leaves the French in prime position on future trades. However, the jury is still out on the actual volume of remaining export demand.
UK values are down £1 on the week, but Brexit continues to rule. Although Theresa May managed to get her revised Brexit proposal through parliament, getting it through Brussels looks a more difficult task as she looks to renegotiate the Northern Ireland backstop.
In summary, not a week of great change. The US market is all about Chinese talks, the EU market is all about reduced Black Sea supplies, and the UK is all about Brexit. In the meantime, the wheat trade rumbles on with the same scale of uncertainty overhanging the markets, and now the trade has also started talking about the colder weather – well, it is still winter!