EU Wheat Mixed, Close To Multi-Month Lows

24/07/13 -- EU grains were mixed, consolidating a little from some of the recent losses. Nearby Nov 13 Paris wheat fell below EUR190/tonne at one point yesterday, for the first time since Dec 2011, before closing at a lifetime contract low, whilst Nov 13 London wheat finished at a 12-month low. Maybe a degree of consolidation was therefore in order.

London wheat closed with front month Nov 13 GBP0.15/tonne firmer at GBP164.65/tonne, Jan 14 was GBP0.25/tonne higher at GBP166.00/tonne and Nov 13 Paris wheat was unchanged at EUR190.25/tonne.

The head of Russia’s Grain Producers Union estimated that drought will cut wheat production for there to 45-48 MMT versus the USDA's 54 MMT and the Ministry's forecast of no less than 50 MMT. The Tatarstan region has currently harvested 14% of their grain crop, with yields averaging only 2.01 MT/ha, less than 5% up on last year's disaster, and yields are expected to decline as the harvest progresses from winter sown crops into those that were spring sown.

The shop window however shows that nationally Russian grain yields are currently up 24.6% at 2.94 MT/ha, producing a crop of 31.9 MMT so far. Wheat yields are said to be almost 26% higher at 3.11 MT/ha, producing a crop of 26.6 MMT.

The Russian Grain Producers Union, who of course have a vested interest on coming in at the low end of trade expectations, estimate the 2013/14 grain crop at only 75-80 MMT, way down from 95 MMT predicted by the government, and only approximately in line with the 77.2 MMT produced last year.

Also potentially crucially they have the 2013/14 grain exportable surplus at 15-15.7 MMT - around the same as in 2012/13 and far less than the market currently expects.

Current low prices are flushing out some interest on international markets. Algeria reportedly bought "at least" 400,000 MT of wheat for November shipment overnight on an optional-origin basis. Prices were said to have been around USD273-274/tonne C&F versus the circa USD269/tonne paid last week for Sep/Oct shipment material.

Egypt’s GASC issued their second wheat tender in a week for an unspecific tonnage of wheat for shipment September 1-10.

As with last week, Russian, Ukraine and Romanian wheat got the nod with French origin material said to be priced out to the tune of around USD10/tonne before freight costs. They finished up buying 240 TMT in total at around USD252/tonne.

The Bureau of Meteorology in Australia estimated that the chance of exceeding median rainfall for August-October is more than 80% for southern New South Wales, parts of Victoria, and southeast South Australia.

Ukraine said that they'd exported 746 TMT of grains in the Jul 1-23 period, including almost 111 TMT of wheat, 398 TMT of barley and 235 TMT of corn. The Ukraine government are said to have bought over 1 MMT of wheat locally for the domestic intervention fund in an effort to support prices. The added that they plan to raise their local purchase price.