Paris Wheat Settles At 2-Month High On Brisk Exports And FSU Rains

27/09/13 -- EU grains closed mostly higher, encouraged by Chicago wheat rising to a two month high on the Dec 13 contract, and the best levels for a front month since June.

The market closed with Nov 13 London wheat settling GBP0.25/tonne firmer at EUR156.00/tonne and Jan 14 up GBP0.15/tonne at GBP158.05/tonne. Nov 13 Paris milling wheat rose EUR2.25/tonne to EUR193.50/tonne whilst Nov 13 Paris rapeseed was up EUR3.00/tonne higher at EUR367.25tonne.

Nov 13 Paris wheat settled on the highs of the day, and the best close in more than two months as EU exports continue at a brisk pace. Brussels issued 436 TMT of soft wheat export licences this past week, taking the 2013/14 marketing year to date total to an impressive 6.2 MMT.

This time a year ago that total was only 3.3 MMT and we finished up exporting 22.2 MMT of wheat in 2012/13, according to the USDA. We would therefore appear to be well ahead of schedule to hit this season's target of 23 MMT.

For the week, Nov 13 London wheat settled GBP4.30/tonne higher, with it's Paris counterpart up EUR7.75/tonne. Front month rapeseed gained EUR4.25/tonne.

The Russian rain-lashed grain harvest lumbers on at a painfully slow pace. Progress is currently less than 75% done, producing a crop of 76 MMT to date. That includes 47.2 MMT of wheat off 77.1% of the planned area, along with 14.6 MMT of barley off 81.1% of plan.

This also means that planting of winter crops for the 2014 harvest is well behind schedule. Less than half of the planned winter cropped area has been sown so far - 7.4 million hectares. This time last year planting had been completed on 11 million hectares. The official forecast for winter grains plantings this year is 16.4 million hectares.

It's a similar story in Ukraine where constant rains mean that possibly around 2 million of the planned 7 million hectares of winter wheat might not get sown this year, according to the Ukraine Farmers Association.

The first frosts of the winter are forecast for northern Ukraine and around Moscow next week, say Agritel. It's looking like there could be more spring wheat sown in these areas than normal for next season's harvest - if they can get the seed.

As wheat prices in the States currently outrun corn levels by a traditionally high premium of more than USD2/bushel the incentive to plant more of the former for 2014 is high.

Back in the spring when this year's corn crop was getting planted, wheat and corn prices in the US were almost at parity. Hence US farmers sowed the largest corn area in 75 years. Here in Europe the price difference between wheat and corn was only around 10-12 euros in the spring, today it's closer to 25 euros.

The IGC forecast world wheat plantings for the 2014 harvest at 225.4 million hectares, the highest since 1997.

The IGC yesterday cut their forecast for the EU-28 corn crop this year from 65.7 MMT to 64.2 MMT, even so that's still up 14% on last year.