EU Wheat Mixed But Mostly Lower
The market appears to be looking for direction, unsure if we are looking at year-end consolidation and poised for a move higher come the new year, or if we've peaked at what are for London wheat at least historic all-time highs.
There's a bit of rain in the forecast for the end of the week for US winter wheat on the Great Plains, although to temper things it needs to be remembered that the crop there is entering winter dormancy in the worst state it's ever been in.
"The USDA winter wheat conditions are not issued during the winter season beginning in December. It is safe to assume hard red winter wheat conditions worsened last week, as the Great Plains weather was very warm and dry. Last week, in USDA's final fall report, hard red winter wheat was the worst on record with 22% good-excellent, 45% fair and 33% poor-very poor," say Martell Crop Projections.
"Worsening drought in spring wheat growing areas is another concern. North Dakota is the leading spring wheat state, growing hard red spring wheat, and second top wheat producer behind Kansas. The southeastern third of the state has grown very dry in recent months. Spring wheat areas of northwestern Minnesota have also succumbed to drought," they add.
The jury is also out on European wheat prospects for 2013. French plantings are finally just about complete, although emergence and crop development are still well behind schedule.
The situation in the UK is even further behind, with the AHDB/HGCA/ADAS saying last week that 25% of the planned UK wheat area remains unsown and that 7% of what has been planted is at risk of failure. In the case of OSR 20% of this year's autumn plantings are "of questionable viability".
Australia's ABARES said today that the wheat crop there would come in at 22 MMT, down 0.5 MMT from their previous estimate, and more than 25% lower than last year's bumper 29.5 MMT. Export potential was also reduced by 600 TMT to 20.9 MMT. Even so both estimates are above the USDA's latest forecasts.
A Reuters poll estimates Australia’s 2012/13 wheat crop at 20.5 MMT.
Various investment banks are lining up for a punt at wheat price prospects for 2013. The general consensus seems to be for a peak in Q1, followed by a decline of 20-30% by then end of the year.
