GRAIN MARKETS

Gleadell managing director David Sheppard, comments on the wheat market: US markets have remained in their downward spiral, as spill-over selling after the bearish US Department of Agriculture report continues. EU prices have eased on the week, trading down one euro (89p) a tonne as slow exports, falling Russian export prices and a weaker US dollar continue to weigh on values.

The main talking point this week has been the court ruling in Egypt reinstating the zero tolerance of ergot contamination in wheat imports. It will be of interest to see what the confusion over Egypt’s intake criteria actually means in US dollar terms. UK futures have also eased, down £2 a tonne on the week, although there has been little change in physical prices, especially in the nearby positions. Reports that one of the UK’s ethanol plants has brought forward its annual maintenance shutdown – and has indicated a prolonged time period – has the trade talking of spot prices easing, due to the reduced demand this will cause.

UK wheat exports rose in September to 75,284 tonnes, down 78% year on year, and although imports for the same period were reported at 419,093 tonnes, down just 2% year on year, this still leaves the UK supply and demand forecast very much in balance.

In summary, US markets are looking to retest market lows along with the Matif. Egypt’s unclear import policy has thrown confusion into the market, while market dynamics in the UK show little signs of easing. Funds continue to extend their short position, and current market fundamentals give little evidence why they should change their current stance.