EU Wheat Lower On Outside Influences

21/11/12 – EU grains closed generally lower with Nov 12 London wheat down GBP0.50/tonne at GBP216.00/tonne, with benchmark May 13 also GBP0.50/tonne lower at GBP220.75/tonne and new crop Nov 13 up GBP0.50/tonne to GBP187.75/tonne. Jan 13 Paris wheat ended one euro lower at EUR269.25/tonne.

Once again we have a relative lack of fresh fundamental news, which seems to make the market drift lower. A series of external non-fundamental influences appear to hold sway at the moment.

The Russian Ag Ministry said that they were raising their 2012/13 grain export estimate to 15.5 MMT from a maximum of 11 MMT previously.

They also said that domestic 2012 intervention sales would total 1.0-1.1 MMT (they have already sold 568 TMT since they began selling off government owned stocks on Oct 23) including 61,715 MT sold in a tender today.

In addition the Russian Deputy Ag Minister said "the ministry will start large-scale commodity interventions on the Russian grain market starting from February 2013." Adding that "we plan to shift the bulk of grain sales to harder times – Feb–Mar 13, we will submit this suggestion to the government for consideration.”

It would seem therefore that Russia are to attempt to squeeze a little bit more grain out of the country and support domestic demand with intervention sales.

Iraq announced that it had bought 350 TMT of wheat in a tender, including 200 TMT of Australian origin wheat, 100 TMT from Canada and 50 TMT from Russia. There was no room for either EU or US wheat it would seem.

In other news, the FAO said that Morocco would import a record 8.4 MMT of cereals in 2012/13, including 5.2 MMT of wheat. That's an increase of 35% on last season by virtue of a 38% decline in grain output to 5.3 MMT.

Looking further ahead, MDA CropCast said that Europe would produce 18.5 MMT of OSR in 2013/14, up 2.4% from the 18.07 MMT produced in 2012/13.

World markets remain jittery over the Middle East, Greece, the EU summit and the impending US "fiscal cliff" - all of which are encouraging a "risk-off" mentality at the moment.

UK and continental weather remains largely unhelpful, with widespread rain causing flooding in many countries.