EU Wheat Slumps As Fund Money Exits Market

12/11/12 -- EU wheat consolidated heavily today, in line with Friday night Chicago weakness that extended into overnight Globex trade.

Nov 12 London wheat closed GBP6.60/tonne lower at GBP214.25/tonne, with benchmark May 13 ending the day GBP6.00/tonne easier at GBP221.00/tonne. Nov 12 Paris wheat went off the board EUR7.25/tonne lower at EUR272.75/tonne, with the more active Jan 13 finishing EUR7.00/tonne weaker at EUR270.00/tonne.

A hangover from a bearish USDA world supply and demand report on Friday was carried into Monday's trade, with fund money scrambling for the exits. Rapeseed, which took the biggest hit Friday, was also on the receiving end again today with front month Feb 13 down EUR11.00/tonne, pressured by US soybean prices slumping to 4 month lows in Chicago as funds cut their length in beans to the lowest in at lest 8 months.

Other commodities like coffee and sugar have also seen heavy fund liquidation in the past week, according to the latest data from NYSE Liffe.

Yet, wetness concerns in the UK and France have now spread into Spain which has picked up 2-4 times its normal rainfall totals in the past 30 days, with 6-8 inches falling in the last seven days in the south of the country in the past week, according to World Ag Weather.

"Showers should finally ease a bit across southern Spain this week, which will allow wetness there to begin to subside," say MDA CropCast.

Things aren't looking promising for US winter wheat heading into dormancy either. "Virtually no rain has occurred for a month in southern Kansas, Oklahoma and the Texas panhandle. Hard red red winter was 28% good-excellent, 48% fair and 24% poor-very poor on the November 4 report from USDA," say Martell Crop Projections.

"Dry weather is expected across the western Midwest and Plains this week, which will allow the dryness to remain extensive in the western Plains. Cooler temperatures will continue to slow wheat growth across the Plains and western Midwest, but no notable freeze damage is expected. Wheat will likely enter dormancy poorly established, and moisture next spring will be critical once the crop emerges from dormancy," said MDA CropCast.

Ukraine's corn crop is 81% harvested at 16.5 MMT to date, say the Ministry there. That takes their total grain harvest to 43.5 MMT to date, with a final output of 46 MMT on the cards, they add. That would be around 19% down on last year. Their wheat harvest finished at 15 MMT.

Total grain exports currently stand at a record 9.42 MMT, of which 4.57 MMT is wheat, 3.1 MMT corn and 1.61 MMT barley as traders scramble to get their grain away before the government shits to door. Full season exports will total around 20 MMT versus 21.79 MMT in 2011/12, say the Ministry. The vast majority of the remainder to ship will be corn.

There is now widespread talk of a Ukraine wheat export ban coming in on Dec 1st, once existing commitments to Egypt have been completed.