EU Wheat Steady As UK Harvest Stalls

Posted by Nogger - a legend in his own mind at 19:57 | Categorized as

29/08/12 -- EU grains ended mixed, but mostly higher, with Nov 12 London wheat up GBP1.50/tonne to close at GBP204.75/tonne and with Nov 12 Paris wheat EUR4.25/tonne firmer at EUR265.00/tonne.

Fresh news was pretty thin on the ground. Parts of the US Deep South are expected to pick up heavy rains as Hurricane Isaac makes landfall. They will come too late to help corn (indeed they will at best hinder the harvest, and at worst the associated high winds may even cause some damage), but could assist late planted second crop soybeans.

Further west there may be a chance of some beneficial rain on the Plains ahead of winter wheat planting.

Tunisia, Jordan and Saudi Arabia are all tendering for wheat. The latter is in the market for 550 TMT for Dec/Feb shipment, a decent volume and one that follows closely on the heels of a recent 290 TMT purchase for Oct/Nov delivery.

This would seem to indicate that they think that downside is limited, particularly ahead of Friday's top level meeting of the Russian PM and his Ministry of Agriculture advisers to discuss the grain markets.

Russia say that their grain harvest is 62% complete, producing a crop of 53.4 MMT so far, with yields down 27% on this time last year. Ukraine's harvest is 66% done producing a crop of 25.5 MMT and yields 15% lower than a year ago.

China says that it has stockpiled 23.2 MMT of home-grown wheat to date, in an effort to support prices, protect farmers and encourage domestic production.

Widespread rain has stalled the UK harvest once more. The crop is maybe 40-50% cut in the south east, 25% done in the south west and no more than 10% completed further north.

Low bushel weights seem to be an unfortunate and recurring theme, as rain hasn't been a problem they are blamed largely on the general lack of sunlight over the past 3 months or so. Few crops are making 72kg/hl, the usual minimum required standard, with 68kg/hl or less commonplace.

Protein levels amongst the milling varieties are said to be pretty good however, so it remains to be seen if the domestic millers are prepared, or able, to lower their minimum bushel weight standards.

Ensus will be producing bioethanol by the end of the week I understand, with Vivergo still set to set to begin operations in the last quarter of 2012, further tightening the UK supply and demand balance sheet.

That has some now pegging the UK's exportable wheat surplus at less than one million tonnes in 2012/13.