EU Wheat Mixed, Weak Pound Supports London Market

28/01/13 -- EU wheat futures closed mixed with Mar 13 up GBP0.45/tonne at GBP213.45/tonne, benchmark May 13 also up GBP0.45/tonne at GBP214.45/tonne and new crop Nov 13 GBP2.15/tonne higher at GBP189.45/tonne. Mar 13 Paris wheat was unchanged at EUR247.25/tonne.

London wheat once again garnered some support from the pound slipping to it's lowest level since August 2012 against the US dollar and below 1.17 against the euro for the first time since Dec 2011.

The weekend widespread snow and subsequent rapid melt and flooding will have done little to improve the already pretty dismal crop prospects for the UK harvest in 2013. Still, the destiny of UK prices will be heavily influenced by production across Europe and beyond, as much as what is going on here. New crop Ukraine corn is said the be available at a substantial discount to the Nov 13 London wheat future.

Defra are due to issue revised estimates for UK supply & demand on Wednesday, with wheat imports likely set to rise above the current 2 MMT forecast.

Jordan are tendering for 100 TMT of optional origin wheat for March/April shipment. Syria's tender for wheat is now closed, with the results due in the next few days. Morocco is tendering to buy 176 TMT of soft wheat on the domestic market. Egypt remains absent, although that may have more to do with the ongoing civil unrest in the country than playing the market.

The last couple of week's worth of export sales from the US indicate that things are picking up for them. Both have been ahead of the required level to hit the USDA's targeted level of 29.5 MMT of foreign sales in 2012/13.

They will need to maintain that momentum, but might just do it as supplies elsewhere around the world tighten. The market is also focused on US winter wheat conditions which are very far from ideal on the Great Plains.

"Weekend precipitation was near expectations. Light rain showers occurred in eastern CO, northern KS, southern NE, far eastern OK and eastern TX. Amounts were 0.10 to 0.50 inches with less than 10% coverage. Isolated rain and snow showers will be confined to western NE, eastern CO, eastern OK and eastern TX from today through Tuesday. Amounts through Friday will be 0.10 to 0.75 locally up to 2.0 inches with less than 10% coverage," said MDA CropCast

State-by-state crop condition updates will be released later today, although many are expecting little to no improvement.

Canadian farmers hope to plant 5-10% more wheat for the 2013 harvest, according to the CWB. Potential margins for wheat are said to be significantly better than those of other grains like oats and rye.

Ukraine said that it exported 1.6 MMT of grains during the Jan 1-25 period, bringing the 2012/13 marketing year-to-date total to 15.8 MMT, an increase of 46% on last year. Wheat exports have now hit the 6 MMT mark and will be reduced to a trickle, if anything, for the remainder of the season.