EU Wheat Gains Despite Rain, Supported By US Market
19/04/12 -- EU grains finished higher with May 12 London wheat up GBP0.50/tonne to GBP178.50/tonne but and Nov 12 up GBP2.00/tonne to GBP155.00/tonne lower. May 12 Paris wheat was EUR2.00/tonne higher at EUR209.25/tonne, new crop was EUR1.50 to 1.75/tonne firmer.
Old crop London wheat retains the look of a thin market in which some of the remaining shorts are getting squeezed.
Despite the pound rising to its best levels against the euro in nineteen months, and five month highs versus the dollar, May 12 London wheat managed to post the best closing level for a front month since June 2011.
Widespread rain fell again today across many parts of the UK, France and Western Germany. Western Europe has received generous rainfall in April that eases drought and stabilizes wheat and rapeseed conditions, although crop damage may not be totally irreversible, according to Martell Crop Projections.
Brussels issued 279 TMT of soft wheat export licences this past week, bringing the year to date total to 11.09 MMT, almost a third down on this time last year.
US corn & wheat posted strong gains today, adding spillover support to the EU market, despite the fact that they still remain at a significant discount to European origin grains.
EU Wheat Mixed
18/04/12 -- EU grains finished mixed with May 12 London wheat closing GBP1.55/tonne higher at GBP178.00/tonne, but with new crop months GBP0.50-1.50/tonne easier. May 12 Paris wheat rose EUR3.00/tonne to EUR214.75/tonne, new crop months showed only modest gains.
The London old crop/new crop spread continues to widen, with the May/Nov differential now at GBP25.00/tonne it is almost double the GBP13.05/tonne it began the month with. Old crop London wheat also curiously remains at a premium to Paris wheat.
Nearby London wheat rose despite the pound climbing above 1.22 against the euro for the first time since August 2010 after the release of the minutes of the Bank of England's April meeting showed less chance of further QE.
Concern over Spanish debt is also weighing heavily on the Eurozone.
Widespread rains across much of the UK should be easing drought fears. Rain is also on the cards for much of France and Germany today and later this week, bringing relief to crops stressed by winter drought.
The current huge low over Ireland is dominating events and producing plenty of widespread rain all over Europe. When that low finally weakens next week another large one moves in to replace it, keeping things cool and wet for the rest of the month, say WXRisk.com.
Some European crop production forecasts have already being downgraded though.
German farm group DRV today pegged soft wheat production there at 20.9 MMT, 1.8 MMT down on last year and around 1.5 MMT below other trade estimates. They've also reduced their rapeseed production estimate to 4.32 MMT, which again is around half a million under other numbers in the market.
Meanwhile, Spain's agriculture ministry forecasts that the winter grain harvest there will fall by 24.6% this year.
EU Wheat Mixed, Rapeseed Jumps
17/04/12 -- EU grains finished mixed with May 12 London wheat down a whole five pence to GBP176.45/tonne, whilst new crop Nov 12 added GBP0.65/tonne to close at GBP153.50/tonne. May 12 Paris wheat ended EUR2.50/tonne higher at EUR211.75/tonne, Nov 12 was EUR1.25/tonne firmer at EUR200.00/tonne.
UK Customs data reveals wheat exports of 212,700 MT in February, bringing the 2011/12 marketing year to date total to just under 2 MMT, which is almost 12% down on the same time a year ago.
UK barley exports are ahead of last season by 7% at 648,700 MT and rapeseed shipments are more than double where we were a year ago at 643,500 MT.
Spain took 57,400 MT of the February wheat shipments, with the Netherlands receiving 48,000 MT and 47,250 MT going to the US - the fourth such consignment in a row.
Russia have exported 18.5 MMT of wheat by April 15, and will finish the season exporting a total of 20.5 MMT, according to the Russian Institute for Agricultural Market Studies. That matches the current USDA forecast for 2011/12 and would be a record volume.
Rapeseed prices jumped, with May 12 closing within a whisker of the EUR500.00/tonne mark at EUR499.50/tonne as South American soybean production estimates keep getting trimmed. Oil World lowered their Argentine soybean forecast to 44 MMT and cut their Brazilian soybean production estimate to 65 MMT, both are 1 MMT below the USDA's latest figures.
Oil World also cut their forecast for EU-27 rapeseed production this year by 700,000 MT to 18.5 MMT, a reduction of 3% on last season. Various sources are reporting significantly worse than anticipated losses across the winter to drought, winterkill and assorted fungal diseases.
Old Crop EU Wheat Higher, New Crop Lower (Again)
16/04/12 -- EU grains finished mixed but mostly lower. May 12 London wheat rose GBP0.85/tonne to GBP176.50/tonne but new crop months were GBP1.20/tonne to GBP 2.05/tonne lower. May 12 Paris wheat was EUR0.25/tonne higher at EUR209.25/tonne, new crop was EUR2.25 to 2.75/tonne lower.
Old crop London wheat is clearly outperforming, continuing to widen the gap between it and new crop. A week ago the May 12/Nov 12 spread was GBP14.70/tonne and today it's GBP23.65/tonne, almost a GBP9.00/tonne difference in a week.
For the month of April so far May 12 London wheat has gained GBP1.75/tonne whilst Nov 12 has lost GBP8.85/tonne. Based on tonight's close May 12 London wheat is worth around EUR4.30/tonne more than the same position in Paris.
The pound rose to it's highest levels against the euro since September 2010 today on heightened concerns over Spanish debt.
French crop conditions from FranceAgriMer suggest that the winter wheat crop is now rated 62% good/excellent versus 75% last year, winter barley is similarly rated 55% compared to 77% in 2011, whilst the durum crop is in an even worse state at 42% good/excellent against 71% this time last year.
The USDA were due to announce spring planting progress and winter wheat crop conditions tonight, but it seems that this report may be delayed until tomorrow due to a technical problem. The market is expecting corn plantings to have raced to a record 20% done as of Sunday night, with spring wheat sowings progressing to a huge 50% complete. Widespread weekend rains and more of the same is seen boosting early spring crop development.
Russian railway operator Rusagrotrans say that Russian grain exports as of the end of March stood at 22.3 MMT for the current marketing year. Ukraine's stood at 15.3 MMT and Kazakhstan's at 7.7 MMT, they added. Full 2011/12 marketing year (July/June) exports are seen at 25.7 MMT from Russia, with Ukraine at 21.0 MMT and Kazakhstan at 12.5 MMT, they estimate.
Morocco bought 180,000 MT of wheat of unknown origin and Libya bought 30,000 MT of Russian wheat in various weekend tenders.
EU Wheat Ends Mostly Lower
13/04/12 -- EU grains finished mostly lower although May 12 London wheat bucked the trend closing GBP1.00/tonne higher at GBP175.65/tonne, new crop months were GBP0.55/tonne easier. The more liquid May 12 Paris wheat fell EUR0.75/tonne to EUR209.00/tonne.
On the week as a whole that puts front month May 12 London wheat GBP3.90/tonne higher, but new crop Nov 12 GBP3.00/tonne lower. That means that the gap between May 12 and Nov 12 has increased by more than fivefold since the turn of the year.
Clearly something is amiss with front month London wheat which has now appreciated by more than 15% since the turn of the year. Paris wheat meanwhile is only up 3% since then and Chicago wheat is down by almost 5%.
Exactly the same thing happened a year ago. On the first day of May 2011 front month May 11 London wheat was GBP206.00/tonne, by the end of June it was GBP155/tonne. The May/Nov spread saw Nov at a GBP34.00/tonne discount to May on the first trading day of May 2011, by the time May went off the board that gap had fallen to GBP11.50/tonne and before May was out the new front month old crop Jul 11 was trading at a discount to new crop Nov 11.
The much more liquid market that is Paris wheat is clearly a better barometer of what is really going on in the market. May 12 ended the week EUR2.25/tonne lower than it began it and Nov 12 fell EUR3.25/tonne.
Brussels only issued soft wheat export licences for 84 TMT this week, a lower weekly volume than that we have only seen once in the entire marketing year.
UK and EU weather conditions in general have improved significantly over the past week, that will hopefully mean that crop prospects will be enhanced for the 2012 harvest. It should perhaps be noted that this improvement comes a month earlier than it did in 2011.
Old Crop London Wheat Higher, New Crop Lower
12/04/12 -- EU grains finished mixed with May 12 London wheat up GBP2.65/tonne higher to GBP174.65/tonne, whilst new crop months were GBP0.50/tonne lower. May 12 Paris wheat ended EUR1.00/tonne higher at EUR209.75/tonne, Nov 12 was EUR1.50/tonne firmer at EUR203.75/tonne.
Old crop London wheat widened the gap between it and new crop again, with the May12/Nov12 differential now standing at more than GBP20.00/tonne, at the turn of the year ot was less than a fiver.
The only plausable explanation I can give for this is the news today that Vivergo has begun taking in wheat for testing purposes ahead of rolling into production. It now looks as if they may after all begin some kind of meaningful production this side of new crop.
Strategie Grains cut their EU-27 soft wheat production estimate by a sizable 4.3 MMT today to 126.8 MMT citing frost and drought damage. They also cut their barley production estimate by 1.1 MMT from last month to 52.4 MMT and knocked 0.6 MMT off their durum wheat forecast to 7.8 MMT.
Both the wheat estimates bring them into line with forecasts from Coceral which have already been in the marketplace for a fortnight or so. As a consequence of lower wheat production Strategie Grains also lowered EU-27 2012/13 soft wheat export potential by 3 MMT to 13.5 MMT.
Both analysts also agree on a European all wheat crop of 134.6 MMT, a drop of 2.9 MMT on last year. Before the February freeze hit Strategie Grains were forecasting an all wheat crop of 142.2 MMT this year.
Decent rains have however developed for Europe over the past week or so, with more in the forecast, potentially improving new crop prospects.
Gap Between Old And New Crop London Wheat Continues To Widen
11/04/12 -- EU grains finished mixed but mostly lower. May 12 London wheat rose GBP1.50/tonne to GBP172.00/tonne but new crop months were GBP0.30/tonne lower. May 12 Paris wheat was EUR0.25/tonne higher at EUR208.75/tonne, new crop was EUR1.25-1.50/tonne lower.
Fairly decent European rains over the past few days may have helped new crop prospects seems to be the trade's thinking.
"Generous rainfall finally developed last week in dry wheat growing areas of Europe. Moisture was very welcome after a two-month drought, February -March. Growers feared another very severe spring drought may be developing, similar to last year when France and Germany produced a sub-standard wheat harvest," say Martell Crop Projections.
"Generous April rainfall last week, plus a wet forecast ahead suggests back-to-back spring droughts may not be in the cards. The weekend forecast shows the jet stream carving out a deep trough over Western Europe, suggesting more rain may be coming to dry areas.
"Germany and northern Poland received from 0.50 to 1 inch of rainfall from last week's showers. The United Kingdom was much wetter with 1.0 - 1.5 inches of rain. France, the leading wheat country, missed out in the key northern growing area receiving only 0.10 - 0.20 inch of rain in scattered showers. The Mediterranean region suddenly grew stormy as well, causing very heavy rainfall in Spain, Italy and Romania," they add.
The differential between old and new crop London wheat continues to widen, much as it did around this time of year twelve months ago. The May12/Nov12 spread at the end of 2011 was just GBP4.25/tonne, today it has closed at almost four times that.
EU Wheat Falls On Weekend Rains And Bearish USDA Corn Data
10/04/12 -- EU grains finished mostly lower with May 12 London wheat down GBP1.25/tonne to GBP170.50/tonne and May 12 Paris wheat falling EUR2.75/tonne to EUR208.50/tonne.
Weekend rains for the UK, France and Germany were viewed as bearish. Even so, FranceAgriMer said that France would harvest the smallest soft wheat planted area since 2033 this year due to winter kill losses.
Only 4.72 million hectares of the planted 5.07 million hectares will make it through to harvest, pegging winter losses at almost 7%, they said. This year's all winter grain area was estimated at 6.55 million hectares versus 7.1 million in March and down 5.7% from 2011.
The USDA raised world wheat consumption by around 3 MMT to 686.8 MMT, lowering ending stocks by a similar amount to 206.3 MMT, although that still ranks as one of the highest levels on record.
They surprised the market by leaving 2011/12 US corn ending stocks unchanged at 20.3 MMT, although world inventories were cut by almost 2 MMT to 122.7 MMT. They noted record high US ethanol stocks and reduced daily ethanol production in recent months since the abolition of the blenders' tax credit but left 2011/12 demand for corn from this sector unchanged at 5 billion bushels.
Last night the USDA increased their weekly spring wheat planting progress from 8% to 21% complete as of Sunday night, compared to just 3% last year and 5% on average. Winter wheat crop conditions also continue to show significant improvement at 61% good/excellent, from 58% a week ago and well ahead of the 36% this time last year.
EU Wheat Rises, Paris Rapeseed Closes At 14-Month High
05/04/12 -- EU grains finished higher, with the exception of malting barley futures. May 12 London wheat ended GBP2.25/tonne higher at GBP171.75/tonne, whilst new crop months were GBP0.55/tonne steadier. May 12 Paris wheat ended EUR2.00/tonne higher at EUR211.25/tonne, Nov 12 was EUR2.25/tonne firmer at EUR204.75/tonne.
For the holiday shortened week as a whole May 12 London wheat closed GBP3.00/tonne lower with May 12 Paris wheat EUR1.50/tonne easier. At these levels May 12 London feed wheat is little more than a EUR3.00/tonne discount to Paris milling wheat.
European wheat as a whole remains too expensive on the international stage. Egypt bought 115,000 MT of US wheat in a tender today at USD259.75/tonne plus freight, that was more than USD30.00/tonne cheaper than French wheat. The freight differential between shipment from the US and France is currently only around USD10.00/tonne.
Further highlighting Europe's lack of a competitive edge is news that Brussels issued soft wheat export licences to the tune of 251 TMT this past week, bringing the marketing year-to-date total to 10.7 MMT - 5 MMT, or 32%, behind last season's pace 40 weeks into the campaign.
London wheat's strength on the day was all the more mystifying given that the pound closed at 1.2125 against the euro, it's best closing level on the weekly chart since August 2010.
The US winter wheat harvest will soon be upon us in southern States, Informa Economics estimated production at 1.631 billion bushels this week (44.4 MMT) - up 9.2% on last year.
Meanwhile harvesting in Pakistan is already underway and India are expected to begin harvesting an all-time high record crop of their own next week. With plentiful carryover stocks left over from last year India sold wheat to Bangladesh this week.
Meanwhile, the continued firmness in the world soybean market saw Paris rapeseed close the week at EUR504.00/tonne, up EUR13.75/tonne on the week and the highest closing price for a front month in 14 months.
Opinions as to how much damage has been done to the 2012/13 EU-27 rapeseed crop vary quite widely. The EU Commission currently forecast output in the coming year at 20.4 MMT, 1.1 MMT up on 2011/12. Coceral are less optimistic forecasting a crop of 19.1 MMT, Copa Cogenca are even more bearish giving us a figure of just 18.3 MMT.
Whichever way you look at it production looks likely to be well below usage, which the Commission peg at 22.9 MMT.
EU Wheat Falls On Rain And US Price Declines
04/04/12 -- EU grains finished mostly lower with May 12 London wheat falling GBP2.50/tonne at GBP169.50/tonne - the first time it has closed below GBP170.00/tonne in three weeks. New crop months were GBP3.50/tonne lower and May 12 Paris wheat fell EUR2.25/tonne to EUR209.25/tonne.
The market followed US wheat lower, knowing that EU prices are already at uncompetitive levels relative to American origin. Based on last night's closing levels May 12 Chicago wheat was the equivalent of USD242.00/tonne, compared to USD273.50/tonne for London wheat and USD279.00/tonne for Paris wheat.
Widespread rain (and snow) across much of the UK, and some parts of France and Germany too, will have eased drought fears.
The EU Commission forecast EU-27 wheat production in 2012/13 at 139.9 MMT, 3 MMT higher than last year, and more than recent estimates from Copa Cogenca (137.2 MMT) and Coceral (134.6 MMT).
The Commission see a 2 MMT cut in animal feed usage in the coming season. Demand from the bioethanol industry is only seen rising 0.2 MMT following Abengoa Rotterdam's switch to using corn as a feedstock as opposed to wheat.
EU-27 2012/13 wheat ending stocks are seen rising by a third to 13.9 MMT.
They are also relatively bullish on rapeseed production prospects compared to Copa Cogenca and Coceral, estimating the 2012/13 crop at 20.4 MMT - although that is still 2.5 MMT below domestic usage.
In international news Jordan bought 50,000 MT of wheat of unspecified origin in a tender today. Iraq is tendering for a minimum of 50,000 MT wheat, although it usually buys more, last time round Canadian wheat got the nod.
EU Wheat Ends Mostly Lower
03/04/12 -- EU grains finished mostly lower with May 12 London wheat down GBP1.75/tonne to GBP172.00/tonne and May 12 Paris wheat falling EUR1.50/tonne to EUR211.50/tonne.
After posting sharp gains Friday and Monday, Chicago grains were a bit subdued today in a mini Turnaround Tuesday. EU wheat, and particularly London wheat, looks too expensive relative to grain from US and other origins around the world.
Rain and snow for Scotland is pushing south bringing a shot of much needed moisture for most areas of the UK by Wednesday afternoon. France too is also seeing some showers across southern and eastern areas, replenishing depleted soil moisture profiles there.
Copa Cogenca peg EU-27 wheat production at 137.2 MMT, 0.2 MMT down on last year, but considerably better than the 134.6 MMT given to us by Coceral on Friday. Barley production will be 53.9 MMT, an increase of 2.2 MMT and corn production will be down 1.2 MMT to 65.1 MMT, they say.
They say that UK wheat output will be 16.3 MMT in 2012, 6% up on last year and see barley production virtually unchanged at 5.5 MMT.
The market has risen substantially since the mid-December lows. Back then Strategie Grains were projecting and EU-27 wheat crop of 142 MMT. The mean of the Copa Cogenca and Coceral estimates fits in with a report by Agritel today suggesting that the winter drought and the February freeze wiped 6 MMT off EU-27 wheat production.
The Rosario Grains Exchange today cut their Argentine corn crop estimate to 19.7 MMT - down 2.3 MMT on the USDA's March number and almost a third lower than the 29 MMT that was expected back in December from what is normally the world's second largest corn exporter.
EU Grains Closing Comments
02/04/12 -- EU grains finished mixed with May 12 London wheat ending down GBP1.00/tonne at GBP173.75/tonne, and May 12 Paris wheat ending EUR0.25/tonne higher to EUR213.00/tonne.
Ideas that Friday's gains were overdone saw London wheat edge lower, especially after Chicago came in around 10 cents weaker in afternoon trade. Rapeseed on the other hand was sharply higher in line with strong gains in Chicago soybeans.
The IGC increased their forecast for this season's 2011/12 world wheat crop by 1 MMT to 696 MMT, but cut carryout slightly although to a still very healthy 210 MMT. The outlook for next season is not quite so rosy though they project, estimating production 15 MMT lower at 681 MMT, with ending stocks reducing slightly to 208 MMT.
World corn production in 2012/13 will rise to an unprecedented 900 MMT, they said. That's a 4% increase on this season, and a huge 100 MMT more than was produced just four seasons previously - even so "the supply and demand outlook for corn is projected to remain quite tight in 2012/13," they added. Carryout for 2011/12 was cut 4 MMT from last month to a spartan 122 MMT, with ending stocks next season only seen recovering a little to 129 MMT.
The USDA resume their regular weekly crop progress report tonight, which the trade expects to show US corn planting at 6-8% complete and 58-60% good to excellent winter wheat condition ratings versus only 37% a year ago.
The HGCA say that UK spring planting is well ahead of normal due to the recent favourable weather conditions. Over 80% of spring barley is now drilled, compared to 50% normally. Dry conditions are not yet said to be adversely affecting crops, they add.
The UK, France and Germany are set for light showers to locally moderate precipitation over the next few days. Spain is in for scattered to widely scattered showers and thundershowers today through to Wednesday.
Production prospects are however getting trimmed on the Continent with Coceral last week pegging EU-27 all wheat output at 134.6 MMT, almost 3 MMT less than in 2011. The Spanish all wheat crop is seen 29% lower, accounting for 2 MMT of that loss.
The EU-27 barley crop will come in at 54.0 MMT this year, an increase of 4% aided by increased spring plantings, with corn production falling 4% to 62.0 MMT despite a larger planted area, they add.
Coceral peg the EU-27 rapeseed harvest slightly higher than last year at just over 19 MMT, as opposed to last year's crop which was just under. Despite a higher planted area a return to more normal yields should see the UK produce a crop of around 2.6 MMT, they predict. Germany's crop is forecast almost 1 MMT higher than last year at 4.8 MMT, with French output unchanged.
"The weather pattern is undergoing a major change in the United States and around the Northern Hemisphere, as the jet stream ridges and trough become realigned. Weekend weather in the Midwest turned sharply cooler across the Great Lakes region as maximum temperatures Saturday fell into the 40s-50s F. A few northern Great Lakes growing areas even reported frost. The sudden cooling was a sharp reversal from predominant warmth in March when temperatures were 15-25 F above normal," say Martell Crop Projections.
"Northern Europe now faces a much colder forecast. March was incredibly warm with a dominant ridge of high pressure. Now a cold trough is developing. The Russia weather has turned suddenly warm in the Volga and Black Earth districts, causing rapidly melting snow and standing water in frozen fields. We still anticipate a delayed spring grain planting campaign in the spring grain belt from sodden fields," they add.
Russia's Ag Ministry have announced that they are to start selling 2 MMT of intervention grain stocks in Southern, North-West and North Caucasus regions this week to keep a lid on prices and replenish stocks there.
Kazakhstan's Ag Ministry say that their 2012 grain harvest is likely to fall 44% to 15 MMT (from almost 27 MMT in 2011) due to adverse weather conditions.
EU Wheat Rises Boosted By Bullish USDA Data
30/03/12 -- EU grains finished generally sharply higher with May 12 London wheat ending up GBP3.75/tonne at GBP174.75/tonne, and May 12 Paris wheat climbing EUR5.50/tonne to EUR212.75/tonne.
The long awaited USDA report was the catalyst to send futures scurrying higher in afternoon trade. On the week overall May 12 London wheat was GBP2.25/tonne firmer whilst May 12 Paris wheat was actually EUR1.25/tonne lower.
London feed wheat is punching well above it's weight at the moment, based on tonight's close it is only around EUR3.00/tonne cheaper than Paris milling wheat.
Today's USDA numbers were particularly bullish for soybeans, with spring plantings pegged well below anticipated levels at 73.9 million acres, lower than the lowest trade estimate and 1.1 million below the USDA's February Outlook estimate.
Corn plantings were seen at close to 96 million acres, but old crop stocks were said to be tighter than anticipated. Wheat plantings at 55.9 million were towards the low end of what was expected and more than 2 million below last month's USDA Outlook Forum.
In Europe Coceral, in its first forecast for the 2012-13 harvest, pegged soft wheat production 2.1% down on last year at 126.76 MMT.
UK output is estimated marginally higher than in 2011 at 15.58 MMT, French production is also forecast up a tad at 34.08 MMT, with Germany chipping in with 22.37 MMT, a fraction less than a year ago.
The Coceral number is well below the figure of 131.1 MMT issued by Strategie Grains just a fortnight ago and would appear to confirm concerns that the damage cause by the February deep freeze and subsequent drought has indeed caused more damage than originally thought.
EU Grains End Lower, But Outperforming US Wheat And Corn
29/03/12 -- EU grains finished mostly lower ahead of tomorrow's all important USDA reports with May 12 London wheat down GBP1.65/tonne to GBP171.00/tonne and May 12 Paris wheat falling EUR4.25/tonne to EUR207.00/tonne.
The USDA will give us some guidance tomorrow on US plantings for the 2012 harvest and also March 1st US stocks. Whilst wheat is probably the least likely to spring a surprise what they have to say for corn will almost certainly influence wheat prices too.
Whilst weather conditions are bordering on ideal across the Atlantic things don't look quite so rosy here in Europe. That is reflected by the recent price action for wheat and corn here compared with in the US.
Chicago corn prices have fallen 8% in less than a fortnight, with wheat prices there declining 6% in the same period, based on last night's closing levels. Yet at last night's prices Paris wheat was only down 1% and London wheat was actually marginally higher on where it stood back then.
It's not surprising then that French wheat was overlooked in yesterday's Egyptian tender in favour of much cheaper US and Argentine wheat.
This lack of competitiveness of European wheat is also maybe reflected in the fact that Brussels only issued 210,683 MT worth of soft wheat export licences this past week, the lowest total of the past six weeks.
The 2011/12 marketing year to date total now stands at 10.47 MMT, 32% lower than a year ago with only 13 weeks left to go.
In tender news, Bangladesh bought 50TMT of Indian wheat for April/May shipment. The latter isn't normally an eager exporter but has plentiful carryover stocks left over from last year and has just begun what it expects to be a record wheat harvest in excess of 90 MMT for 2012.
As I am about to hit the "publish" button May 12 Chicago corn trades lower for the seventh session out of the last nine at USD6.11 1/2. A quick look at the weekly chart shows that it has only closed lower than that four times out of the past fifty two weeks. In other words we are trading within the bottom 8% of where US prices have been across the whole of last year.
In stark contrast at GBP171.00/tonne May 12 London wheat has been lower on no less than 36 occasions on the weekly chart in the past year. That means we are currently trading within the top 31% of where prices here have been over the last twelve months.
EU Wheat Declines On More Consolidation
28/03/12 -- EU grains finished lower with May 12 London wheat down GBP1.40/tonne at GBP172.65/tonne. New crop Nov 12 was GBP1.70/tonne lower at GBP159.75/tonne. May 12 Paris wheat closed down EUR2.00/tonne to EUR211.25/tonne.
It feels like today was more consolidation and profit-taking ahead of Friday's important USDA data. Nobody appears confident of what that might bring, with anything from outrageously bullish to stunningly bearish and everything in the middle possible.
One report I read said that Chicago corn has touched a limit move, one way or the other, in six of the last seven years that this report has been issued. That doesn't seem to mean that it has closed limit up or limit down, but it has traded at the daily limit at some point during the session.
We can only wait and see what Friday will bring, but history would appear to suggest that something dramatic, one way or the other, may be statistically likely.
Meanwhile Egypt bought one cargo each of US and Argentine wheat in it's latest tender today. The former was reportedly at USD262.84/tonne and the latter at USD259.35/tonne. For the record, the cheapest French wheat offered was at USD300.00/tonne. Russian and Ukraine origins were also passed on.
The HGCA made some tweaks to the UK 2011/12 supply and demand balnce sheet today, cutting domestic Human and industrial (H&I) wheat consumption by 46TMT due to lower demand from the ethanol sector than previously anticipated.
They indicated that they don't expect Ensus to operate this side of June, but suggested that "there are strong expectations that the plant being commissioned at Hull could process wheat this season."
"Wheat usage as animal feed is forecast at 6.45MMT, up 5% on 2010/11 but down 35TMT on January’s estimate," they added.
EU Wheat Consolidates Ahead Of USDA Report
27/03/12 -- EU grains finished mostly lower with May 12 London wheat ending down GBP3.10/tonne at GBP174.05/tonne, and May 12 Paris wheat falling EUR4.00/tonne to EUR213.25/tonne.
It was a day of consolidation after yesterday's sharp gains, with traders wary of what the USDA might throw at them on Friday.
For Mar 1st US wheat stocks the trade is expecting a figure of 1.255 million bushels.
For US plantings an all wheat area of 57.6 million acres is the average trade guess, with the range of guesses at 56.6-58.3 million, that's a bit lower than the 58 million the USDA suggested last month but still up almost 6% on last year's 54.4 million.
US crop conditions are also hugely better than they were this time last year with 75% of Oklahoma and 59% of Kansas wheat rated good/excellent. Mid-March last year only 22% of Oklahoma's and 25% of Kansas wheat was placed in the top two categories.
We should never underestimate the USDA's capacity for surprise. On the day of these reports last year March 1st stocks US corn stocks were below even the lowest trade estimate and corn closed limit up, with wheat 36 cents higher and soybeans up 38 1/4 cents.
In other news, the EU Commission's research unit MARS projected EU-27 2012 wheat yields at 5.41 MT/ha, a small increase on last year. Of note were ideas that the UK yield would average 4% more than in 2011 at 8.07 MT/ha, with those in France 7% higher at 7.11 MT/ha and Germany's up 7.5% to 7.57 MT/ha.
The largest decline in yields this year is seen coming from Romania, down 21%, with Ireland down 15% and Spain falling 14%.
EU-27 barley yields are forecast 2.6% higher this year at 4.41 MT/ha, with those in the UK at 5.82 MT/ha, up 2.7%. Rapeseed yields EU-wide are seen averaging 3.02 MT/ha, up 5.5% on last year, with the UK yield falling from a record 3.94 MT/ha to a more normal 3.5 MT/ha this time round.
London Wheat Closes At Highest Since June 2011
26/03/12 -- EU grains finished sharply higher with May 12 London wheat climbing GBP4.65/tonne to GBP177.15/tonne and May 12 Paris wheat up EUR3.25/tonne to EUR217.25/tonne.
This was the highest close for a front month for London wheat in nine months following another extremely warm and dry weekend that will only have heightened drought loss fears at home and on mainland Europe.
Shorts will be getting squeezed out by this sharp and unexpected rally from wheat.
Soybeans are closing in on USD14/bushel following continued crop write-downs in South America. Oil World now predict that world soybean production in 2011/12 will fall more than 20 MMT from last year.
The trade is now focusing on the USDA's March planting intentions report which comes out on Friday. The vibe for that is big corn acres, with spring conditions largely favourable for early planting, only a modest increase in soybean sowings and although wheat area will be up that it may fall short of the 58 million that the USDA said last month.
Before that DEFRA give us the revised S&D numbers for UK crop production for 2011/12 on Wednesday.
EU Wheat Rises As Chinese Grain Stocks Get Questioned
23/03/12 -- EU grains finished higher with expiring Mar 12 London wheat going off the board unchanged at GBP175.00/tonne. Other old crop months were GBP2.25/tonne higher, with new front month May closing at GBP172.50/tonne. New crop was GBP2.40 to GBP2.60/tonne firmer. May 12 Paris wheat closed up EUR3.75/tonne to EUR214.00/tonne.
The week overall weekly performance was flat with May 12 London wheat unchanged and May 12 Paris wheat up EUR0.25/tonne.
It's shaping up to be another interesting year. Although not exactly fresh news, the size of China's grain stocks have perhaps never before been doubted quite so openly as they are being at the moment.
According to the USDA, at the end of 2011/12 China will be sitting on 22% of the world's soybeans, almost 30% of the world's wheat and 47% of it's corn stocks. Is it all really there, and how would the market react if it knew that it wasn't?
Eager to take advantage of any global shortage, US farmers will plant a modern day record 95.1 million acres of corn this spring, say Farm Futures magazine - which is 1.1 million more than the USDA suggested last month. They see soybean plantings at 76 mill acres, 1 million more than the USDA said and all wheat sowings at 56.7 million which is 1.3 million less than the USDA forecast in February.
High soybean and rapeseed prices will encourage Canadian growers to plant a record 21 million acres of the latter this spring, according to Oil World. That's an increase of almost 12% on last year for the world's largest exporter of rapeseed.
Ukraine will plant a record corn area this spring, also looking to cash in on high prices. Any crop losses in Western Europe to the February freeze and/or winter drought will also spawn increased corn plantings here. Will we get the rain though, that's the question?
In fact that's only one of a number of questions. European debt is a far from sorted issue, how is that going to pan out in the remaining three quarters of 2012? Will there still be an EU-27? Could anything else come from off field to spook the funds into packing up their bat and ball and looking for something a bit safer and less volatile than the markets we find ourselves stuck with?
In other news, Brussels issued 440,000 MT of soft wheat export licences this past week, 38 weeks into the marketing year. That was the second best total since week 19, even so exports are more than a third down on where they were a year ago.
EU Wheat Close - Thursday
22/03/12 -- EU grains finished mostly higher. Expiring tomorrow Mar 12 London wheat closed GBP3.00/tonne higher at GBP175.00/tonne without trading, the soon to be new front month May 12 ended GBP0.50/tonne firmer at GBP170.25/tonne. May 12 Paris wheat was up EUR1.50/tonne to EUR210.25/tonne.
The market is clearly all over the place, based on tonight's close front month London wheat has gained 15% on 2011's closing levels, it's Paris counterpart has added 3.7% whilst in Chicago prices are 1% lower!
Traders are struggling to assess the affects of last month's hard freeze combined with a distinct lack of moisture in Western Europe.
February's cold wave may have lopped 5 MMT off this year’s EU-27 wheat harvest, and a lack of rain might further harm output, said one report on Bloomberg quoting Offre et Demande in France.
Whilst a combination of drought and extreme cold may be harming European wheat prospects, it's likely to be helping corn potential. Ukraine might plant as much as 5 million hectares of corn for the 2012 harvest, a 38 percent increase on last year, according to the Interfax-Ukraine news agency today.
Meanwhile across the pond winter wheat crop conditions have improved, fairly dramatically in some cases, since crops went into dormancy. Rains this week are seen helping crop ratings improve some more next week.
EU Wheat Narrowly Mixed
21/03/12 -- EU grains finished narrowly mixed with Mar 12 London wheat unchanged and May 12 down GBP0.25/tonne to GBP169.75/tonne. May 12 Paris wheat was unchanged, with new crop Nov 12 up EUR0.50/tonne to EUR200.00/tonne.
Reports that up to 8% of French winter crops had succumbed to the February freeze were supportive. News that Morocco and Algeria had both bought South American wheat in preference to more expensive EU and US origins was not.
News that the Spanish port of Cartagena is about to unload 40,000 MT of US wheat highlights how the recent decline in world freight markets opens up what would have been traditionally considered to be a "safe" European home to other origins.
Russia's grain exports meanwhile have slowed right up, with only 400,000 MT being shipped out in the first ten days of the month as they find themselves priced out of the market.
US weather is currently favourable for both winter wheat development and timely corn (and spring wheat) plantings. The US all wheat area is expected to be around 5-9% higher for the 2012 harvest and crop conditions are markedly better than they were last year too.
The Ukraine Ag Minister says that corn plantings there may increase by between 23-29% to 4.3-4.5 million hectares for the 2012 harvest. Whilst much of that increase comes at the expense of failed winter wheat, carryover stocks of the latter at the end of the current season are expected to be the largest in almost 20 years at 7-8 MMT.
