EU Wheat Falls As Russia Sits On Hands
For the week London wheat was GBP1.15/tonne higher, whilst Paris wheat gained EUR3.50/tonne. At the close Nov 12 London feed wheat was only around EUR5.50/tonne cheaper than Nov 12 Paris milling wheat, whilst May 13 in London is actually EUR1.00/tonne higher.
Another week of widespread showers to heavy rain keeps large question marks remaining over the final size and yields of UK crops. Open interest in the most active Nov 12 London wheat has declined from around 10,000 contracts to around 7,500 in the past fortnight as shorts ponder how much 72.5kg/hl bushel weight wheat is actually out there.
The much-awaited Russian Ministerial meeting to discuss he grain markets turned out to be a non event, with no sign of an export ban or even any form of tariffs to restrict grain shipments.
The Ministry did officially narrow their grain production estimate from 70-75 MMT to 70 MMT, although this had been alluded to already. Exports for 2012/13 were pegged at 10-14 MMT yet they've shipped 4.6 MMT already in Jul/Aug, with at least a further 2.5 MMT, and possibly as much as 3.0 MMT, per month likely in both September and October.
Clearly they will have to do something at some point, but if they've decided what it is yet, they aren't telling.
IKAR Today cut their estimate for Russian grain production to 69-70 MMT, of which they forecast wheat output at 39-40 MMT. That compares pretty closely with SovEcon's 70 MMT and 38 MMT estimates released yesterday.
The EU Commission estimated EU 2012/13 soft wheat crop at 127.3 MMT, up 800 TMT from their previous forecast of 126.5 MMT. The EU-27 corn crop was placed at 60.2 MMT, which is 1.5 MMT down on their previous estimate of 61.7 MMT.
The German Farm Ministry estimated Germany’s 2012 grain crop at 44.7 MMT up 6.7% from a year ago. Wheat output is seen at 22.5 MMT, fractionally down on last year.
In the Southern Hemisphere, a drier week ahead for Argentina will be welcome after abundant August rains. The Buenos Aires Grains Exchange estimated the 2012 Argentine wheat area at 3.6 million hectares versus the government estimate of 3.7 million.
In Australia, showers favoured southern Victoria and southeastern Queensland yesterday and should return to western portions of Western Australia on Monday, then favour southeastern South Australia on Tuesday, according to MDA CropCast.
On noted agricultural consultant estimated Australia’s 2012/13 wheat crop at 25.0 MMT, 15% down from last year's record 29.5 MMT output. Large carryover stocks however mean that 2012/13 exports will match the 2011/12 record of 23.0 MMT.
