EU Wheat Narrowly Mixed Ahead Of USDA Report

09/04/13 -- EU wheat was in consolidation mode ahead of tomorrow's USDA supply and demand numbers, closing narrowly mixed. Even though wheat is not expected to play a starring role tomorrow, everyone knows by now that the USDA's capacity to surprise should not be underestimated.

London wheat closed with May 13 unchanged at GBP201.05/tonne and with new crop Nov 13 GBP0.25/tonne easier at GBP187.00/tonne. May 13 Paris wheat settled EUR0.75/tonne lower at EUR245.00/tonne.

For European wheat the general background is one of strong exports tightening old crop stocks, and weather concerns over new crop.

Latest customs data out of France shows that their Feb soft wheat exports were 1.88 MMT, almost double the 993 TMT shipped a year earlier and the best monthly total since March 2011. All this was achieved in the shortest month of the year too. Barley exports were also almost double year ago levels in Feb at 582 TMT.

That takes soft wheat exports for 2012/13 to 11.36 MMT, an increase of 17% on a year ago, with barley exports up by almost a third to 3.66 MMT. Algeria was the largest soft wheat export home in February taking 414 TMT of the grain. Morocco (271 TMT), Yemen (137 TMT) and Tunisia (107 TMT) were the other major buyers.

French soft wheat plantings are seen up 2.2% this year to 4.97 million hectares, with barley sowings down 5.5% to 1.59 million ha, and the OSR area down 5.6% at 1.52 million ha. Despite an increase in wheat plantings Agritel today forecast the French soft wheat crop at 34.8 MMT, down 1 MMT on last year. They are estimating wheat yields at 6.98 MT/ha, which is 4% below the five year average due to delayed crop development and autumn planting problems.

Elsewhere, UkrAgroConsult cut 4% off their Ukraine wheat crop estimate to 20.23 MMT, although this is still up sharply on the USDA's 15.8 MMT estimate for last year's crop. The Ukraine analysts predict yields down from 3.21 MT/ha previously to 3.08 MT/ha, and versus 2.52 MT/ha in 2012. They raised their corn production estimate from 21.2 MMT to 21.8 MMT however.

IKAR cut their Russian grain production estimate from 90-92 MMT to 89-90 MMT, versus 83-89 MMT from SovEcon and 90-92 MMT from the Ag Ministry. The Russian government sold 54 TMT of intervention grain at today's tender, bringing the total volume sold since sales began to 2.71 MMT. Russian grain exports in March were only 307 TMT, including 116 TMT of corn, 94 TMT of wheat and 82 TMT of barley. That takes their 2012/13 marketing year to date grain export total to 14.15 MMT, down 37% on a year ago.

The export tender line-up is currently rather thin with Bangladesh in for 50,000 MT, Jordan in for 100,000 MT and Taiwan in for 82,300 MT. South Korea bought 55,000 MT of optional origin feed wheat overnight at USD309.75/tonne basis cost and freight for arrival by July 20.

A freeze threat will spread across areas of the western US Plains tonight and stretch into tomorrow, with Kansas and Oklahoma the most at risk states.

Last night's crop condition report from the USDA had Kansas winter wheat up two percentage points in the poor/very poor category to 31%, the same proportion of the crop in the state is also rated good/very good, highlighting how variable crop conditions are this year. Oklahoma saw a three point switch out of poor into very poor, with a third of the crop remaining rated in the bottom two categories, along with a one point gain in good/excellent to 28%. Texas very poor was up seven points to 22%, with poor down five to 29% and good/excellent up one to 17%.

Nebraska was only rated 11% good/excellent and 51% as poor/very poor. South Dakota was rated 0% excellent, 3% good, and a whopping 75% of the crop was in the poor/very poor category. These two states typically account for around a combined 10% of US winter wheat production, versus 22% from the top state of Kansas, 7% Oklahoma and 6% from Texas.