US prices are down $5/t on the week, as a bearish USDA corn report exerted ‘spill-over’ pressure into the wheat complex – US wheat stocks were increased, despite a 25mln bushel hike in exports, currently running 28% ahead y/y
Paris wheat futures fell to a new contract low of €170.75/t (Dec19 position) before stabilising, as focus remains of the potential higher EU crop and exports running 30% lower y/y
Russia’s Ag Ministry does not see any significant risk for the grain harvest this year despite several regions declaring states of emergency over extreme weather
Russia’s SovEcon raised it estimates of this year’s wheat crop to 74.4mln t, up from 73.8mln t previously, as yields on late-harvested crops have improved slightly
Russia has received the go-ahead to supply wheat to Saudi Arabia, due to the Middle Eastern state’s relaxing their quality specification, which could have a major impact upon German and Baltic exports
Ukrainian farmers have almost completed the 2019 wheat harvest, threshing 27.9mln t from 98% of the sown area
Germany’s 2019 wheat harvest will increase 17.5% y/y to 23.81mln t despite an early summer heatwave which stressed crops, the association of arm cooperatives (DRV) commented, although the crop size is lower than initially projected
2019 UK crop prices are trading £3.50/t lower on the week, and within 25p of the contract low seen back in May, as global weakness and the UK’s uncertain future (Brexit) weighs on prices
In summary, the trade wasn’t expecting a bullish wheat report, and it didn’t get one! However, the very bearish corn report released has resulted in liquidation by long-holders.
The almost 15% drop in US corn values has ‘spilt-over’ into the wheat complex, driving the market lower, both in the US and Europe.
The wheat report just confirmed the fact that there is no shortage of wheat, just an apparent lack of demand, and with most exporters showing crop increases y/y, the pressure is starting to build
Of interest, with Paris set a new contract low this week, and London is only 25p/t away, the US market is still sitting about 35c/bushel, or $12-13/t above its low, showing that it may still has room to fall lower