EU Wheat Rises, Crop Conditions Support

29/01/13 -- EU wheat closed higher with Mar 13 London wheat up GBP0.60/tonne to GBP214.05/tonne, May 13 up GBP1.55/tonne at GBP216.00/tonne and new crop Nov 13 firming GBP0.60/tonne to GBP190.05/tonne. Front month Mar 13 Paris milling wheat gained EUR0.25/tonne to close at EUR247.50/tonne.

The weakness of the pound continues to underpin wheat in London relative to that in Paris, along with the ongoing very poor UK crop  conditions and the outlook for another domestic production disaster in 2013.

Wheat also drew support via news from across the pond that US winter wheat conditions had worsened considerably in the top two producing states of Kansas and Oklahoma compared with last month and the last weekly USDA report released at the end of November.

In Kansas 39% of the crop is now rated as poor/very poor, versus 31% a month ago and 25% at the end of November. In Oklahoma poor/very poor conditions are now a whopping 69%, from 61% at the end of December and 44% in late November. The proportion of Nebraska wheat rated poor/very poor is now  50%.

"If there is any god news on winter wheat potential it would be a favourable crop in the Pacific Northwest, where soft white wheat is grown. Washington, the leading grower, reporting a very promising crop from generous winter precipitation and no significant freeze damage," reported Martell Crop Projections.

The Russian Ministry are lowering their forecast for 2012/13 grain exports from 15.5 MMT to 14.0 MMT, according to the Prime News Agency. That's exactly half the volume exported in 2011/12.

The latest official figures pegged exports so far this season at just over 13.0 MMT as of 16 Jan, meaning that very little grain will leave the country between now and the end of the season. Ending stocks meanwhile are now estimated at 9 MMT, less than half the volume left over at the end of last season.

Rumours of potential imports abound, even if the government don't waive the 5% duty on foreign wheat shipments.

India continue to take advantage of the current relatively high wheat price and dwindling international availability, releasing another 125,000 MT of milling wheat for export overnight, this parcel being for Feb 20 - Mar 31 shipment via the east coast port of Krishnapatnam.

Ag Canada say that they expect all wheat production there this year to come in at 28.5 MMT, 4.8% up on last year due to a combination of increased plantings and better yields. The Canadian Wheat Board yesterday forecast that wheat plantings this season would be 5-10% higher than last year’s 23.8 million acres.

Ag Canada estimated the country's 2013 barley crop at 9 MMT, up 12.5% on last year, with canola output seen at 15.5 MMT, a 16.5% increase on 2012.