Another week and again lower prices. Despite US spring sowing lagging the five-year average due to inclement weather, wheat markets have fallen to fresh contract lows. Fund traders seem happy to discount current weather issues and extend their already short positions. A firmer US$, higher-than-expected Canadian spring and durum sowing and the general expectation of a major rebound in 2019 global wheat production keeps the bearish overview intact.
European prices have followed the US market lower, setting new-crop contract lows despite a near two-year low on the euro/US$ rate. EU exports continue to rise, now seen only 2% down year-on-year at 16.5mln t. However, maize imports are reported at just under 20mln t, up 41% on the year, and continue to provide a more cost-effective alternative to wheat in feed diets and industrial usage. Russian wheat exports continue to slow, with analysts now projecting a seasonal total of 33-34mln t against the current USDA projection of 37mln t.
UK prices have also slipped over the past week. Old-crop physical prices continue to divorce themselves from what will become a technical May futures position, while new-crop prices remain pressured by the bearish global outlook.
In summary, with a lack of supporting news, markets continue to drift lower. No news from Chinese trade talks, improving US winter crop ratings, a more favourable US and EU weather outlook and an apparent oblivious appreciation to current US weather/sowing issues leaves the markets completely on the defensive. We are now at contract lows in Chicago and Paris (with London only £1 away), and some think we still haven’t seen the bottom. Weather and potential US sowing issues struggle to keep any remaining market bulls interested, although at present, the market bears are firmly in control, with no sign of any major factors that may change the current market sentiment!