Last week’s report from the US has helped wheat prices slightly, but it remains to be seen if the effect will be permanent or transitory. With global forecasters predicting the second-biggest wheat harvest ever, and an amount of that in big exporting countries, it is difficult to see that prices have scope to rise.

Still there is a firmer tone to physical markets this week as harvest pressure eases. Black Sea exports have increased in price and the euro dropped slightly. Two main things need to be watched on the supply side – wheat production levels in Australia and exports from Russia. My Australian contacts indicate that they are more likely to have an average yield harvest than a poor one. There were earlier reports of significant dryness issues and growers suggest that some regions may be lower yielding as a consequence, but other regions that got rain may be above normal.

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But what will Russia do? Last season they stated their output level also, but closer to the end of the year, when harvest storage pressure was unloaded, they indicated that they would export less because of growing internal demand.

Russia is stepping up its livestock production in an effort to be independent of world and import restrictions. News that Russia would restrict its currently estimated export level would send a tremor through the market.

Native prices appear to have a firmer tone, but that depends on the day and when one wants movement.

Wheat is running at €170 to €174/t to the end of the year, with a theoretical €177/t for May. Barley is about €10/t lower in all positions.