EU Wheat Dragged Lower As CBOT Trade Turns Negative

Posted by Nogger - a legend in his own mind at 20:29 | Categorized as

22/01/13 -- EU grains were mixed but mostly lower with May 13  down GBP1.65/tonne to GBP216.00/tonne and new crop Nov 13 up  GBP0.25/tonne to GBP191.00/tonne. Mar 13 Paris milling wheat was EUR1.50/tonne firmer to close at EUR253.00/tonne.

EU wheat was higher for much of the day, but moved lower in late afternoon trade as Chicago wheat turned negative soon after trade in the open outcry daytime session began. 

Bangladesh bought 50 TMT of optional origin wheat for Feb/Mar shipment, South Korea have booked 60 TMT of South American/Indian feed wheat in a tender. The former may also end up being of Indian origin.

India are said to have sold 2.3 MMT of wheat (and shipped 1.5 MMT of it) against a government target to release 4.5 MMT of it's state-owned stocks before their new crop gets harvested in March/April. There are some reports today that they'd like to increase this target by another 5 MMT to 9.5 MMT, although exactly how they are going to manage that in such a tight timeframe given their limited logistics is far from clear.

Confidence is high however that India will at least match last year's record wheat crop, and possibly beat it.

The plight of the US winter wheat crop has recently been grabbing the market's attention, although it had been know for some time that conditions are very poor on the Plains. The USDA stopped issuing weekly reports at the end of November. Individual state offices will release their own estimates later this month, with poor/very poor ratings in major producing states like Kansas and Oklahoma expected to have increased.

Dryness concerns in southern Brazil and Argentina are also being voiced, although it seems too early yet to be forecasting serious yield reductions for corn and soybeans.

Ukraine has exported 1.28 MMT of grains so far this month (to Jan 21) and is expected to finish the month shipping around 1.45-1.50 MMT, according to the local Farm Confederation. That contrasts with the 2.5 MMT exported in December and the 3.3 MMT shipped out in November as availability dries up.

This month's total so far includes 0.98 MMT of corn (76.5% of the total volume shipped) and 0.14 MMT of wheat (11%), which highlights the recent switch away from wheat.

The Ukraine Ministry say that the country has exported 15.5 MMT of grains to date this season, up 46% on the same period in 2011/12, although sales were slow to get going last season due to export tariffs still being in place in Q1.

The total volume shipped so far includes 5.96 MMT of wheat, 7.32 MMT of corn and 1.96 MMT of barley. That's very close to the Ministry's "informal" wheat limit with grain exporters of 6 MMT this season.

Russia's grain exports this season currently stand at 13.7 MMT, including 9.85 MMT of wheat. The latter closely matches the USDA's projected total for the whole of the season, effectively ruling Russia out of the international market until the summer.