In the aftermath of the stocks and seedings report it appears that some are struggling with the reality of the situation. Both producers and funds have admitted to lack of acceptance of the data and the longer term bearish implications.2015 and beyond is looking bearish unless farmers withdraw significant marginal acreage from production.

Egypt’s GASC purchased 180,000 mt of wheat for mid-August shipment from Romania and a further 60,000 mt from Russia in their latest foray into the market. Traded prices reflected a slight discount to Black Sea asking levels, and it is interesting to note there is still nothing on the books with Ukraine. One further point is that US Gulf price levels remain too high to be competitive and looks to be the world’s most expensive wheat right now – where does that suggest prices will go in coming weeks?

EU wheat (MATIF) hit five month lows as prices unsurprisingly declined following Monday’s USDA figures. French offers in the GASC tender were still $15/mt too rich to compete – again where does that suggest prices will go?

It feels like markets have further downside, but we would expect a short covering rally as we approach the 4th July holiday period when markets are closed, and quiet in the run up. The opportunity to sell into any rally looks a good one to us.