Old And New Crop London Wheat Settle At Contract Highs
Both Nov 12 and Nov 13 London wheat both closed at lifetime contract closing highs.
Interest in Nov 13 London wheat is picking up markedly. It was trading at a GBP29.20/tonne discount to Nov 12 at the beginning of the month, that is now down to GBP22.60/tonne.
France is starting to take centre stage as the premier supplier into North Africa and the Middle East, but as we are only a third into the 2012/13 marketing year their surplus stocks could run down quickly in the middle third of the season.
That potentially leaves the US to step in and pick up the slack in the final third of 2012/13. Global inventories will be pretty tight by then.
Morocco, who are the third largest wheat buyer in North Africa, may have to import 27% more wheat in 2012/13 than last year after their soft wheat crop fell by more than a third this year after minimal amounts of rainfall from December until early March had an adverse effect on output, says the USDA attaché there.
Following China's sudden and surprising arrival in the world wheat import market, Martell Crop Projections highlight a comments from a recent Syngenta market report: "China is like an elephant in the corner. Even though it is sitting silently, it takes up the majority of the room and you cannot ignore what might happen if it does something unexpected."
The IGC report a reduction in world wheat supplies of 2 MMT from last month to 655 MMT and a reduction of 3 MMT in world 2012/13 carryout versus their September projection. Year-on-year that's a decline of 5.6% in production and over 12% in ending stocks.
They also predict a 3 MMT decrease from last month in the world corn crop this year to 830 MMT, some 5% below last year's output of 876 MMT.
IN addition "the outlook for rapeseed/canola has tightened sharply owing to reduced crop prospects in Canada. Global ending stocks are expected to fall by almost one-quarter, including a steep decline in the two major exporters," they say.
