London Wheat Lower On The Day, Higher On The Week/Month

30/11/12 -- EU grains closed lower with Jan 13 London wheat down GBP1.70/tonne to GBP223.75/tonne, May 13 down GBP2.00/tonne to GBP227.00/tonne and new crop Nov 13 GBP1.50/tonne easier at GBP197.50/tonne. Jan 13 Paris milling wheat fell EUR4.25/tonne to close at EUR269.50/tonne.

Today appeared to be a mixture of consolidation, profit-taking and month-end book-squaring. For the week London wheat still ended with decent gains with Jan 13 up GBP5.75/tonne, May 13 up GBP7.00/tonne and Nov 13 adding GBP8.15/tonne. In contrast Jan 13 Paris wheat ended the week EUR0.25/tonne lower.

For the calendar month May 13 London wheat gained GBP9.75/tonne, whilst Nov 13 advanced GBP11.00/tonne compared to Jan 13 Paris wheat posting only a EUR3.00/tonne advance.

London wheat is clearly pricing in the fact that if you want 72.0-72.5kg/hl wheat in any quantity then you are going to have to import it. May 13 London feed wheat is now around the equivalent of an EUR12/tonne premium over May 13 Paris milling wheat. The market is also pricing in both quality and volume concerns over next season's UK crop with Nov 13 London wheat now running at around parity with it's Parisian counterpart.

Brussels reported that they'd issued 438 TMT of soft wheat export licenses this week, bringing the marketing year-to-date total to 7.3 MMT, more than 12% up on this time a year ago despite a drop of more than 5% in output in 2012. EU-27 barley exports meanwhile are 28% higher whilst corn imports are running 125% ahead of year ago levels.

The AHDB/HGCA/ADAS say 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" they add.

The IGC yesterday said that "following slight revisions for Australia and the EU, the forecast for world wheat production is trimmed by 1 MMT to 654 MMT, a 6% year-on-year decline."

"While global consumption is also expected to fall 2% year-on-year, ending stocks are still set to contract by 23 MMT year-on-year," they added. Europe's 2012 wheat crop was lowered 0.3 MMT from last month to 130.3 MMT, a fall of just over 5% on last year.

In an early glimpse into 2013 they placed the world wheat area up 2% to a 15-year high of 223.2 million hectares, although they already noted early problems in the US, UK and France.

The Russian Hydrometeorological Service say that 12% of winter grains in Russia’s southern region are rated poor/very poor versus the 5-year average of 7.6%. In North Caucasus, poor/very poor conditions are 17% versus 6.9% on average.