In the UK, exports for November fell to the lowest level since 2001-02.
Global sentiment remains underwhelmed following the latest US Department of Agriculture report.
Uncertainty over the quantity of EU shipments of wheat this year continues to be a hot topic, with the euro remaining firm and freight shipments expensive.
May 2018 London wheat futures closed on Thursday at £141.40 a tonne, down £0.60 a tonne week on week.
UK wheat imports outpace exports for a 12th consecutive month
Unsurprisingly, the UK remained a net importer of wheat for the last 12 months, according to the most recent customs data.
A meagre 35,000 tonnes were exported in November, the lowest for the month since the 2001-02 campaign and taking the total so far this campaign to less than 230,000 tonnes, or 75% down from a year ago, or 380,000 tonnes below the five-year average.
On the flip side, imports stand at their highest in four years at 738,000 tonnes in total, of which nearly 40% were from non-European Union countries and they were once again above the season’s average pace in November at 158,000 tonnes.
Consequently, the cumulative trade deficit (exports less imports) is now at its lowest since at least 2000-01.
With a lack of farmers selling and despite a rather staggering performance of the sterling against the US dollar, which improves our buying power, prices have remained resilient with May 2018 London feed wheat trading within its £140-145 a tonne or the last two months.
Prices could come under pressure if corn imports continue at such a record pace, with a total of 882,000 tonnes through to November.
For barley though, the domestic demand and the export programmes have continued to be supportive for prices which are currently trading near campaign highs of £126-128 a tonne ex-farm for May 2018 delivery.
In November, nearly 114,000 tonnes of barley were exported, ie 57% more than in October.
Finally, for rapeseed, domestic values have continued to erode amid a bleak vegetable oil environment and as such Erith prices are at their lowest since the end of July 2016, below the psychological £300-a-tonne mark.
Winter crops have mostly benefited from clement conditions this winter and the 2018 harvest potential is above average, according to CRM Agri clients’ feedback.
Benjamin Bodart, CRM AgriCommodities
Paris wheat values continue fall
EU markets struggled to find upside on the back of a firm euro-dollar exchange rate.
The trade has watched Paris wheat values fall steadily now since July, with the March contract now some E34 a tonne, equivalent to $25 a tonne, off their highs.
The drop still does not allow French wheat to compete to many non-EU destinations, but certainly French wheat is valued to feed its near neighbours.
The amount of wheat that traders and analysts expect the EU to ship this year remains a hot topic – the USDA is still expecting a total wheat number of close to 27m tonnes, whereas a recent publication was closer to 21.5m tonnes before durum exports.
The difference will remain a debate for a while, but with adequate supplies it really will come down to the EU consumer’s interpretation.
Do you wait and hope for downside on the off chance?
It is really a case of knowing your local markets very well. Last week saw the EU trade take the full allocation of Ukraine tariff rate quotas (TRQs) for wheat and corn and some barley along with the limited III country maize TRQ.
The uncertainty is how long this really keeps the market satisfied and if prices with a tax still look well priced against domestic EU cargoes.
The freight market will also play its part, as will weather – short seas freight has been very expensive recently, with bad weather not helping and frustrating some trade.
Cecilia Pryce, Openfield
Sentiment remains underwhelmed
European wheat prices posted yet another down week, as Paris shed a further E5 a tonne to set fresh contract lows. This puts French cash wheat prices around E10 a tonne below cost of production.
Markets on this side of the pond are still playing catch-up to last week’s steep falls on the other side of the pond, where Chicago wheat futures shed nearly 3% on Friday alone, following a slew of bearish official data being released.
Of particular note, the US Department of Agriculture estimated winter wheat area at 32.6m acres, down 1% on last year.
While this is the second smallest area on record, traders had anticipated an even smaller area to be sown and the funds duly extended their [already huge] short positions.
The second key element keeping European wheat prices under pressure is the ongoing strength of the euro against the dollar.
The single currency has risen by more than 2% on the week and over 5.5% since November. Despite the lower prices (in euro terms), European wheat is losing competitiveness against Argentinian wheat supplies into key North African markets.
Looking east, weather forecasts for the next fortnight point to a decent smattering of snow for some key Russian wheat production areas, which up to this point have been unseasonably lacking.
The arrival of a protective snow blanket the young plants need to survive should ease concerns many have over widespread winterkill.
Rupert Somerscales, ODA