Friday's USDA report threw us no real surprises in terms of global supply and demand. As a result, the market's focus returned to cash wheat prices around the world. It feels as though the pace of Russian export business is beginning to dwindle, with origins such as the USA, Ukraine and even France beginning compete. This may go some way to making up the 9% gulf between US exports year on year which will be needed to minimise a heavy carry-out into next season.
Domestically, demand for old crop wheat remains slow. In the absence of any ethanol demand, a greater reliance has been placed on animal feed production for price support. Despite this, the increasing discount from wheat to barley – and even imported maize – continues to cap old crop prices as feed compounders reformulate their rations.
Similarly, on new crop the absence of physical demand indicates an air of uncertainty from UK consumers who continue to weigh up geopolitics and wider new crop prospects. The £18 discount from old to new crop can't last forever. Eventually the gap will close but, for now, it looks unlikely that it will be support for new crop that does this.
