The cereals market could be described as being ‘cautiously bullish’ amid weather problems in key European and North American growing regions.
Last week saw US wheat prices hit three-month highs, supported by a late harvest and a struggle to get corn and soya crops in before the arrival of freezing temperatures on the Northern Plains.
Values slipped later in the week, but remained relatively strong. The poor US weather could also hamper winter wheat plantings, with about 20 per cent of the crop still to be sown.
Night temperatures in North Dakota this week are expected to dip to -10degC.
The weather woes that have hit the UK are also delaying planting progress in Europe.
After a dry summer, Belgium, the Netherlands, northern Germany and Denmark have experienced downpours in the last six weeks, with water surpluses across the region.
Meanwhile, France, Spain, Portugal and Eastern Europe are still very dry with a significant water deficit.
Planting of winter crops has been impacted across the continent. The rain has delayed lifting of potatoes and sugar beet, with the EU downgrading yield expectations for both crops over the last month.
AHDB estimated 70 per cent of the British potato crop had been lifted by October 22.
With the threat of a no-deal Halloween Brexit lifted, the pressure to export UK grain early has eased but there is still a considerable volume that will need shipping before next harvest.
The announcement of an extension of up to three months did little to the exchange rate, with a euro worth £0.86 on Monday – just 0.3 per cent stronger than last Friday’s value, which means UK cereals are still relatively competitive.
Commenting on the immediate outlook, Jonathan Lane, ADM head of grain trading, said: “Bulls need to be constantly fed and, if fresh supportive news is not forthcoming, markets could be subject to bouts of profit-taking.
“That seems to have been the case for US wheat this week, although short-term the downside looks limited.”