EU Wheat Declines On Russian Rains

22/05/12 -- EU grains finished mostly lower although technical and very thin May 12 London wheat, which expires tomorrow, closed up GBP0.25/tonne at GBP175.75/tonne. Nov 12 London wheat fell GBP1.65/onne to GBP158.80/tonne. Aug 12 Paris wheat was unchanged at EUR212.75/tonne, whilst Nov 12 was down EUR2.00/tonne to EUR214.50/tonne.

It was a bit of a "turnaround Tuesday" with Chicago grains falling quite sharply, dragging Europe lower in sympathy.

Much needed rain in eastern Ukraine and Russia may arrive just in time to save ailing wheat crops there.

"Very dry conditions began around a month ago in southern Russia, where 28% of the national wheat harvest is produced. The stressful dry spring conditions developed on top of winterkill losses in Krasnodar. This is one of the 4 key wheat growing areas in the Southern District, where no rain has occurred for over a month. Very extreme heat made drought stress worse, temperatures 10-20 F above normal. Maximum temperatures in the upper 80s F and low 90s F have frequently developed, highly unusual at 45-48 N latitude," say Martell Crop Projections.

"The strong ridge of high pressure responsible for weather stress is expected to move east into Kazakhstan, Siberia and Urals in the coming days. Near normal temperatures would resume in Russia and Ukraine, along with a chance for heavy, soaking rain. Southern Russia is expecting very heavy rain in Krasnodar, Stavropol and Rostov - perhaps up to 2 inches.

"Yet drought and heat stress would develop in Russia's eastern grain belt. Siberia and Urals would be subject to stressful growing conditions, though it appears the heat would be less intense. The ridge of high pressure would weaken somewhat. The eastern Russia grain belt is less important to bottom line grain production, Siberia and Urals contributing just 30% to the national grain harvest, compared with 70% from European Russia," they say.

Meanwhile Ukraine has received generous rainfall in scattered showers over the past 10 days. Some areas like Kryvyi Rih, a key wheat area in eastern Ukraine, have caught up to normal with the recent rains entirely wiping out spring drought, they add.