EU Wheat Back On The Defensive
The market staged a partial correction from Friday's steep gains following the USDA stocks report. Whether we have resumed the downwards phase that saw London and Paris wheat fall to one month lows last week remains to be seen.
The trade is still digesting Friday's USDA numbers. For wheat, whilst US stocks came in lower than expected they aren't exactly scrapping the bins out at 2.1 billion bushels (57.26 MMT).
It is also worth remembering that US wheat exports are currently well below where they would normally be at this time of year, with only 39% of the USDA's full marketing year target sold so far compared to the normal pace of 57%.
US wheat prices remain uncompetitive compared to European supplies, at least into North Africa and the Middle East. They are however it would seem using more wheat domestically for feed purposes.
US winter wheat plantings were 25% complete as of last Sunday, that could be more like 45% as of yesterday when the USDA report on wheat planting progress tonight. "Rains increased across the southern Plains, Delta, and Southeast this past weekend, which significantly improved moisture supplies in those areas," say MDA CropCast.
IKAR today upped their estimate for the Russian grain harvest by half a million to 70.5 MMT.
Analysing Friday's IGC crop production estimates a little bit further we see European wheat output pegged at 135.9 MMT versus 137.6 MMT last time. Of that they have the UK crop at 14.0 MMT, down 0.4 MMT from their previous estimate but above the latest forecasts from Coceral and Toepfer.
They also dropped their ideas on EU-27 wheat exports to 16.8 MMT from 18.0 MMT previously. Russia's wheat exports were placed unchanged at 8.5 MMT (down 60% on last season), Kazakhstan's were also unchanged on last month at 7.0 MMT (a decline of 35%), with Ukraine shipments at 4.8 MMT, up 1.3 MMT on last month but sill 11% down on year ago levels.
For corn, the IGC cut EU-27 production 4.9 MMT to 55.0 MMT. Sharp reductions in output are seen from Hungary (5.2 MMT versus 8.1 MMT in 2011/12) and Romania (6.5 MMT versus 10.5 MMT).
Barley production was forecast slightly higher than last year at 53.4 MMT, with output in the UK now seen at 5.4 MMT versus 5.5 MMT last year.
