EU Wheat Mixed, But Higher On The Week As Exports Support

22/03/13 -- EU wheat futures closed mixed, with the strong export pace supportive but fears over Cyprus keeping traders cautious. After talks with Russia broke down, Cypriot politicians have only the weekend to come up with an alternative solution to raise the funds needed to secure the financial assistance of the Troika.

On the day, London wheat closed with new front month May 13 down GBP0.50/tonne to GBP201.50/tonne and new crop Nov 13 up GBP0.20/tonne at GBP185.70/tonne. May 13 Paris wheat was EUR0.25/tonne lower at EUR241.25/tonne.

For the week, May 13 London wheat rose GBP3.60/tonne, with Nov 13 up GBP2.55/tonne and May 13 Paris wheat rising EUR6.50/tonne.

The Russian Ministry slightly lowered their view on grain production there this year from 95 MMT to 90-95 MMT, but said that exports will rise from 14 MMT this year to 20 MMT in 2013/14. As Russia has already exported 14 MMT of grains in 2012/13 that would seem to indicate that very little will now be shipped between now and the end of the current season.

The Russian Weather Centre said that around 1.3-1.6 million hectares of winter grains will need to be resown this year, that's 8-10% of the planted area which is a little less than normal. Last year 1.9 million ha had to be replanted in the spring.

Some news wires are talking of record crop potential in Ukraine this year, where almost 92% of winter crops are said to be in good to satisfactory condition. Spring plantings are also said to have been progressing well with 22% of the crop already in the ground, according to the Ministry. Of the 647,000 ha sown already the vast majority (540,000 ha) is barley.

UkrAgroConsult estimate the wheat crop in Ukraine at 20.9 MMT this year, up 47% on last year. Corn production will come in at 21.2 MMT, a rise of almost 13%, they add.

They forecast 2013/14 Ukraine grain exports up 26% at 27 MMT, of which 8.75 MMT will be wheat (versus 6.5 MMT this season), 15 MMT will be corn (versus 12.5 MMT) and 2.8 MMT will be barley (versus 2.1 MMT).

Including durum, Brussels have so far issued 15.6 MMT of wheat export licenses in 2012/13. With 14 weeks of the 2012/13 season remaining exports only now need to average less than 280 TMT/week from here on in to hit the USDA's projection of 19.5 MMT for the year. The past week's licenses included 538,179 MT of soft wheat alone.

Meanwhile France are thought likely to have picked up a 350 TMT Algerian wheat order earlier in the week, and German wheat won a 50% share of an Iranian purchase of 120 TMT of wheat overnight. An Iraqi wheat tender closes over the weekend, and Jordan are also tendering for 100 TMT each of wheat and barley.

Widespread snow across much of Europe should help protect crops from sub-zero temperatures this week. Similar conditions prevail on the US Plains and Midwest too. The EU Commission's MARS unit are due to release their first thoughts on yields in Europe for the 2013 harvest on Monday.