US wheat has been falling sharply this week. Yesterday, losses were smaller but direction was still downwards. US funds had built up significant long positions in Chicago wheat and have been selling heavily to reduce these longs.
Australia had some rain over the weekend which can only be a good thing, although there are mixed reports as to how much this will help winter wheat crops. The area is reduced due to dry conditions at drilling and a lot of the rain fell in areas without large amounts of winter wheat. This week's forecast poses a new challenge, with frosts expected in Victoria and Eastern Australia looking very dry again. Argentina also needs rain now.
MATIF wheat closed near to unchanged yesterday. The main news was the General Authority for Supply Commodities (GASC, Egypt) tender which bought 350,000 tonnes of Russian and Ukrainian wheat. Harvest yields in Russia are still running below USDA expectations, making it likely that the final crop will be smaller than the USDA August report suggested. However, they are currently exporting at an even faster pace than last year and remain the cheapest wheat in the world. Monitoring Agricultural ResourceS (MARS) have updated their estimates for the 2018 EU corn yields to 7.57 tonnes per hectare from 7.64 tonnes per hectare last month.
London wheat continued its downward slide yesterday, closing £2.45/t lower on Nov 18 at £177.20/t. UK markets have been following the US lower but the domestic situation is also a driver. Imported wheat and corn will feature in UK rations between now and Christmas due to the import opportunities, when a period of August saw London wheat trading at a premium to MATIF.
Farmers with wheat to sell this side of Christmas are still seeing good values and, whilst these may be some way from the highs now, it is looking increasingly sensible to continue to lock into markets while a good profit is available.