EU Wheat Ends Week With Modest Gains

Posted by Nogger - a legend in his own mind at 14:44 | Categorized as

07/09/12 -- EU wheat closed mixed on the day, with Nov 12 London wheat up GBP1.05/tonne to GBP205.95/tonne and Nov 12 Paris wheat climbing EUR3.50/tonne to EUR265.00/tonne.

For the week overall that places Nov 12 London wheat a modest GBP1.10/tonne higher, whilst Nov 12 Paris wheat has added an equally bashful EUR1.25/tonne.

Egypt may not have booked any French/German wheat in either of their tenders this week, but the inclusion of Romanian origin wheat, along with Russian and Ukraine grain, will still require an EU export licence and boost the weekly totals. Brussels issued 318,000 MT worth of soft wheat export certificates this past week, along with similar for 62,000 MT of barley.

For soft wheat, that brings the 2012/13 marketing year-to-date total to 2.12 MMT, and for barley it's an impressive 1.44 MMT - almost double year ago levels.

Export interest in UK wheat is however nonexistent at these levels, Europe has better quality wheat to sell at lower prices than those in the UK. Domestic consumers continue to adopt a "play it by ear" approach as to exactly what their minimum quality standards are, and what allowances they want/need to offer to accept low bushel weight wheat.

One story related to me this week concerned a feed mill that was rejecting 64kg/hl bushel weight wheat outright last Friday, but accepting it (albeit at a hefty allowance) by Monday.

It would seem that this sort of thing will persist until we get closer to the end of the harvest and the trade has a better handle on what is out there. Highly variable seems to be a good way of summing it up at the moment.

Stats Canada estimated wheat stocks there at the end of the 2011/12 marketing year ended July 31st at 5.88 MMT, 18% down on a year previously but 0.87 MMT more than the USDA currently suggest.

Rapeseed stocks were estimated at 0.79 MMT, 54% down on year ago levels, but also considerably higher than the 435 TMT forecast by the USDA.

Rabobank estimated the Australian wheat crop for 2012/13 at 22.79 MMT, almost 23% down on last season's record 29.5 MMT, principally due to drought in Western Australia state.

That's more than 3 MMT less than the USDA currently suggest. Even so, the large carryover from last year's crop may mean that Australian wheat exports don't fall too much from the 23 MMT they are expected to have shipped out in 2011/12.