EU Wheat Adjusts To Friday's USDA Data
14/01/13 -- EU grains were firmer with Jan 13 London wheat up GBP3.00/tonne to GBP210.00/tonne, May 13 up GBP3.00/tonne lower to GBP212.50/tonne and new crop Nov 13 rising GBP2.50/tonne to GBP185.50/tonne. Mar 13 Paris milling wheat was up EUR4.75/tonne to close at EUR249.50/tonne.
European grains were playing catch-up following the late release of Friday's bullish USDA data, which only came out as the markets here were closing. Further gains in the electronic overnight market added additional support.
The trade is, for now at least, focusing on the tight US stocks situation. For corn 2012/13 ending stocks were pegged well below expectations at 15.3 MMT on Friday - a 17 year low and equivalent to less than 3 weeks worth of supply. US wheat carryout was estimated at 19.5 MMT, somewhat better than corn and 15 weeks worth of supply, but even so still at a 4 year low.
The US weather is seen turning much colder on the Plains this week, increasing winterkill chances amongst already poorly established crops. "Winter wheat potential in the Great Plains is already irreversibly damaged by historically significant drought," noted Martell Crop Projections.
"Oklahoma wheat farms have accrued a 6.8 inch moisture deficit in the 6 months back to July, receiving only 50% of normal rainfall. This is the United States second top winter wheat state behind Kansas. Wheat growers in late December rated their wheat at 21% very poor, 40% poor, 28% fair, 11% good and 0% excellent," they added.
A little closer to home, Russia's IKAR agency are quoted as saying that up to 25% of the nation's crops may have suffered winterkill in some southern and western areas after temperatures suddenly plummeted in places with little or no protective snow cover.
We should have the results of an Iraqi wheat tender, which closed on Sunday, later this week. There were apparently no Russian or Ukraine offers. Australian wheat was said to be the cheapest offer.
Algeria is also tendering for optional origin wheat for Mar/Apr shipment. France would normally supply the bulk of Algeria's wheat requirements, but may miss out this time on price considerations. We will have to wait and see.
Paris wheat did well to brush off the effects of a euro rising to an 11-month high against the dollar (and a 9-month high against the pound), which will further erode EU wheat's competitiveness - not that we need to pick up any more export business this season.
MDA CropCast upped their 2013/14 world wheat production estimate by 0.5 MMT to 678.4 MMT on acreage adjustments in the US. They place the winter wheat crop in Europe at 132.0 MMT this year, which would represent an increase of 4% on last year. The FSU-12 crop is seen rising 27% to 90.9 MMT.
Russia's grain exports in the first six months of the 2012/13 season (to Dec 31) were 12.9 MMT, a drop of 17% on the same period last year. December exports of 970 TMT included 630 TMT of wheat and 210 TMT of corn. Very little wheat is expected to be exported after this month.