EU Wheat Mostly Lower, But It Could Have Been Worse

Posted by Nogger - a legend in his own mind at 17:16 | Categorized as

20/03/12 -- EU grains finished almost universally lower although soon to expire Mar 12 London wheat somehow managed to buck the trend officially closing GBP0.50/tonne higher at GBP172.00/tonne, despite not even trading. Other old crop months were GBP1.25/tonne lower with new crop mostly down GBP1.45/tonne. May 12 Paris wheat was down EUR1.75/tonne to EUR208.75/tonne.

The market has risen a hell of a long way in the past three months and was perhaps massively overdue a shake out.

Given the weakness in corn and soybeans across the pond this was a pretty resilient performance by wheat. There is now widespread talk that crop losses in France at the hands of the February freeze are in fact worse than initially feared.

In addition, news that the USDA attaché in Morocco says that heavy crop losses there due to winter drought will see wheat imports in the coming season surge to 5 MMT or more was also friendly. The country's barley harvest is also set to plunge by 62% to a 12-year low, prompting a doubling in imports to a record 1.0 MMT, according to Agrimoney.com.

Russia said yesterday that it will not be introducing export restrictions on grain this season. Today, Rusagrotrans said that exports in February dipped to 1.1 MMT due to logistical problems caused by last month's deep freeze, bringing 2011/12 marketing year to date shipments to 20.6 MMT. Exports for the full season are likely to be in the range of 25.5-26.0 MMT, they said - comfortably beneath the suggested government limit.

US winter wheat on the Great Plains got a boost from some much needed moisture overnight. More could be on the cards in the next few days. Oklahoma's crop is now rated 70% good/excellent, up four points from a week ago and 14 percentage points higher than it went into winter dormancy back in November.

Private analysts Celeres say that the Brazilian soybean harvest is 58% complete as of Friday, 17% ahead of the five-year average pace. That could be bearish for corn allowing the second crop to go into the ground in a timely manner.

Similar could be said for US corn, where temperatures well above normal in the Midwest are also likely to see early sowings, potentially maximising yield prospects. Well known analyst Dr Michael Cordonnier pegs the 2012 US corn area at 95.5 million acres, which is 1.5 million more than the USDA suggested last month (and that alone would be a post-war record). Revised figures are out next Friday from the USDA.