EU Grains Give Up Early Gains In Cautious Trade
US grains were trading in positive territory for much of the day, supporting EU grains, on bargain hunting and ideas that the recent demise in prices may have been overdone. However, a bit of price erosion Stateside as European markets drew to a close saw EU grains give up early session gains.
Caution is still uppermost in traders' minds with the USDA's January WASDE report scheduled for Friday. Incidentally, new tinkerings with the timings of USDA reports to facilitate recent adjustments to the electronic Globex market trading 21 hours/day, mean that this report now won't be released until 17.00 GMT - leaving the European grains little time to react to the data before the markets close.
Opinion is divided on whether the recent dip, which has seen London wheat fall almost GBP20/tonne in front month Jan 13 since early December, presents a buying opportunity or is merely just part of a major capitulation in the international grain market.
It would help if we knew exactly where Europe stood as far as wheat exports are concerned, but the European Commission seems to be having trouble getting the numbers out saying that today's scheduled release is delayed "for technical reasons".
A report on Reuters suggests that France may have exported around 1 MMT of soft wheat in December, a third more than in the same month in 2011. FranceAgriMer are due to release their revised supply and demand estimates on Wednesday.
Across the Pond: "drought stressed areas of Texas and Oklahoma are expecting heavy rainfall this week that would improve field moisture for winter wheat development. By Wednesday morning, a broad trough of low pressure would develop across the Southern Great Plains. West Texas is expecting 0.50 – 1 inch of rainfall, and Oklahoma 0.75-1.50 inches. Southern Kansas would be relatively drier with expected rainfall from 0.15 to 0.55 inch. Any moisture is beneficial in the wake of historic summer-fall drought," say Martell Crop Projections.
Nevertheless, large accumulated moisture deficits still exist across much of the Great Plains and crop conditions have worsened in the top producing winter wheat states like Kansas and Oklahoma since the USDA's last weekly crop progress report before spring at the end of November.
Meanwhile, Chinese think tank CNGOIC said today that the country's coldest winter in 28 years may hurt the world's largest wheat crop.
Bullish fundamentals like this appear to carry little clout when the funds want out however.