EU Wheat Dragged Lower By Chicago

23/01/13 -- EU wheat futures closed mostly lower with benchmark May 13 unchanged at GBP216.00/tonne and new crop Nov 13 down GBP1.20/tonne at GBP189.80/tonne. Mar 13 Paris wheat was EUR1.50/tonne lower at EUR251.50/tonne.

January London wheat went off the board today GBP0.75/tonne weaker at GBP212.75/tonne. Both London and Paris wheat traded both sides, but ultimately closed generally lower pressured by a weak showing from Chicago wheat on the back of calls for some chance of moisture relief in the week ahead for parts of the parched Great Plains.

Given the very poor state of US winter wheat in many parts however, it seems unlikely that the forecast "up to a half-inch of precipitation in parts of eastern Kansas" will be drought resolving.

Looking further ahead, in their 31-60 day outlook MDA CropCast say "The precipitation outlook has trended drier across the northeastern Plains, northwestern Midwest, Delta, and Southeast, and wetter in the southwestern Plains. The wetter pattern across the southwestern Plains would improve moisture there a bit for wheat, while dryness would continue in the north central and eastern Plains."

Premium wheat availability is tightening, with the Black Sea hanging up the "sold out" signs. EU exports are running well ahead of last year, and Argentina has taken a major hit both in terms of quality and quantity this year.

Cash prices for Australian premium prime wheat meanwhile are said to be commanding significantly larger premiums than normal at around 65 cents over Chicago wheat levels, compared to 40-60 cents under for much of last year. That takes FOB offers to around USD360/tonne for February shipment.

India has plenty of wheat to sell, but they aren't everyone's cup of tea given their limited Western-standard storage capacity.

India's State Trading Corp. reportedly got a best bid of USD314.34/tonne FOB today in a tender to export 40 TMT of wheat from Chennai port in February. That's around USD20-30/tonne cheaper than US or French wheat offers currently in the market.

Chinese customs data shows that they imported 3.689 MMT of wheat in 2012 - the highest volume since 2004 - and up 195% from a year ago. Disease and adverse weather conditions are said to have sapped the quality of last year's domestic wheat crop.