EU Wheat Dragged Higher By US Markets

Posted by Nogger - a legend in his own mind at 19:37 | Categorized as

13/05/13 -- EU grains closed higher, dragged up by firmer American markets once Chicago opened in afternoon trade. The market is expecting US corn plantings to be only around 25% complete in tonight's crop progress report from the USDA. Anything below 29% would be the slowest pace on record for the second week in May since the USDA began issuing their weekly planting progress reports in 1984.

May 13 London wheat finished GBP0.25/tonne higher at GBP191.50/tonne and with new crop Nov 13 GBP0.70/tonne higher to GBP182.20/tonne. Nov 13 Paris wheat settled EUR1.50/tonne firmer at EUR210.25/tonne.

Sifting through the finer details of Friday night's USDA report we see that they have UK wheat yields pencilled in at 7.45 MT/ha this year, up nearly 12% on last year, although 2012 were the worst yields the country has seen since 1988. Production of 11.55 MMT, if achieved, would match the 30 year low set in 2001.

For barley, they estimate UK yields at 5.65 MT/ha, up slightly on 5.47 MT/ha last year which was the worst year since 2001. Despite that barley production was forecast at 6.5 MMT, an 18% increase on last year, and the highest since 2009 thanks to the largest planted area since 2001.

French weekly crop conditions saw winter wheat rated good/excellent fall from 67% last week to 66% as of last Monday, according to a delayed crop report from FranceAgriMer. Winter barley rated in the top two categories was unchanged from a week previously at 66%, whilst spring barley is 80% good/excellent.

Crop development has improved markedly, but still lags year ago levels with 74% of winter wheat at the 2 node stage versus 45% the previous week and 97% a year ago. Winter barley has increased from 68% showing 2 nodes a week ago to 95%, but behind 99% this time last year.

Corn plantings meanwhile have increased to 67% done, which is actually slightly ahead of 65% complete this time in 2012.

Weather-wise for the week ahead Europe is split into two halves, much colder than normal in the west and warmer than normal in the east. Daytime highs of only 57F in the UK on Friday compare with temperatures as high as 82F for Poland and 91F in Ukraine. The western half of Germany, all of France and even Spain too will see temperatures 3-9F below normal for this time of year, according to the GFS weather model.

Trade gossip suggests that this year's Indian wheat crop may fall short of the official government estimate of 93.6 MMT, coming in around the 88-90 MMT mark.

Domestic Russian wheat prices were lower on the week as of Friday, with 3rd grade milling wheat down 1.6% on week previous levels to 9,275 roubles (equivalent of GBP192.70/tonne), say SovEcon with feed wheat down a similar percentage to around GBP186.50 in sterling terms.

The export line up is quiet to start the week. Egypt remain absent from the market, Jordan is still in for 150,000 MT and Iraq’s 50,000 MT tender is pending.

Reports that Morocco was in for a sharp rebound in production this year gained more credence on Friday with the USDA forecasting a wheat crop of 6.8 MMT there this year, up over 75% versus 2012.