EU Wheat Declines, Opinion Divided On US Rain Forecasts
24/01/13 -- EU grains closed lower with Mar 13 London wheat down GBP1.75/tonne to GBP213.00/tonne, May 13 down GBP2.00/tonne at GBP214.00/tonne and new crop Nov 13 falling GBP2.80/tonne to GBP187.00/tonne. Front month Mar 13 Paris milling wheat slumped EUR4.75/tonne to close at EUR246.75/tonne.
The pound remained under pressure following David Cameron's pledge to hold a referendum on Britain's EU membership, even if it won't happen for a while yet. Fears for the UK economy following the recent spate of high profile business failures on the High Street, and news that retailer's Christmas sales hardly rose at all did nothing to improve sentiment.
Sterling slumped below 1.18 against the euro, and very close to it's lowest level since late 2011, whilst against the dollar it fell to it's worst since August last year. A weak pound should be supportive for UK wheat, but not today, even with no export interest to speak of. The best we can say is that London wheat didn't in the end decline as much as Paris wheat.
Customs data out of the leading French export port of Rouen reported grain exports of 114 TMT in the week through to Jan 23, down nearly 29% on the previous week. Wheat exports were down almost 40% to 76,500 MT. Algeria took 30 TMT of that, with a further 27,500 MT going to Morocco and 4,400 MT destined for the UK.
The Russian Deputy Minister of Agriculture urged committees thee to "consider the possibility" of reducing import duty on wheat to zero, even though the Deputy PM said that he sees no need to consider such a move. This smacks of similarities with the "will they/won't they" contradictory comments surrounding reports of the possible introduction of export ban earlier in the season.
Separately, the Russian Ministry also said that the country's grain intervention stocks currently stand at 3.33 MMT, and to "stabilise demand" they expect to sell "nearly" 3 MMT of those between now and the end of the 2012/13 season.
That doesn't leave a lot to play with as far as carryover stocks are concerned. Domestic Russian wheat prices, at or close to record highs, are now amongst the highest in the world.
Elsewhere, Agritel said that Ukraine's grain exports will "struggle to reach 1.5 MMT" this month. They exported 2.5 MMT of grains in December and 3.3 MMT in November. What is being shipped out now is almost exclusively corn.
Hopes that rain in the forecast for some parts of the extremely dry US Plains have put US wheat under a bit of pressure this past few days. There are however many who are far from convinced how beneficial these will really be.
"Drought covers approximately 92% of the central and northern Plains, 55% of the southern Plains and Delta, and 51% of the Midwest. The best improvements this past week occurred across the Delta and south central Midwest," said MDA CropCast.
However they see only "some very minor improvement possible in the east central Plains." Adding that "the core drought areas in the west central Plains should see little, if any, relief."
MDA CropCast went on to forecast EU winter wheat production at 132.04 MMT in 2013/14, with OSR output at 18.49 MMT and the barley crop here at 52.9 MMT.
