The US market is up $2/t on the week as it continues to tread water ahead of tomorrow’s USDA data. Support is still seen emanating from the current US/China trade talks, and the assumption that China will purchases a quantity of US agricultural products, including wheat. However, while US winter wheat plantings are expected to be declared at their lowest level in over 100 years, the likelihood of reduced 2019 production could be more than offset by a reduction in 2018 US exports, and higher ending stocks.
European prices are down €2-3/t on the week as the market weakens under its own weight. Russian exports are declining due to higher domestic prices, although at present the EU export programme is not reaping the benefits. Exports of wheat to non-EU destinations are still reported 26%down year on year. French farm office France AgriMer did forecast an increase in such exports by 150,000t to 8.85mln t, but also lowered intra-EU exports by a similar quantity. However, due to a reduction in domestic feeding, end-season stocks were raised from 2.8mln t to 2.9mln t
UK values are unchanged on the week, although sterling is weaker. While Brexit rumbles on, it was the release of the Basic Payment Scheme data by DEFRA that caught the eye. The data, which is subject to further investigation, showed a greater- than-normal divergence from the June survey estimate for the wheat area in England. If correct, that would dramatically tighten the dynamics of the UK’s supply and demand balance sheet.
In summary, another week of ifs and buts, and whens and maybe’, but little overall action. USDA will provide updated information tomorrow, with US winter wheat sowings leading the interest. However, the trade will also watch for adjustments to the US balance sheet, and whether the USDA starts tinkering with the global export matrix, particularly for the EU and Russia, where current projection remains heavy. Otherwise, it remains all about US/China talks, Black Sea exports and Brexit, although the BPS data has thrown more uncertainty into the mix.