Nogger's Blog

25/01/13 -- EU grains were mixed with Mar 13 London wheat unchanged at GBP213.00/tonne, May 13 also unchanged at GBP214.00/tonne and new crop Nov 13 up GBP0.30/tonne to GBP187.30/tonne. Mar 13 Paris milling wheat was EUR0.50/tonne firmer to close at EUR247.25/tonne.

For the week as a whole that places May 13 London wheat GBP1.00/tonne lower, Nov 13 London wheat GBP1.25/tonne weaker and Mar 13 Paris wheat EUR0.75/tonne easier as the trade adopts a sideways pattern.

Brussels reported that they'd issued 354 TMT of soft wheat export licenses this past week, taking the cumulative marketing year-to-date total to 10.8 MMT. That's now almost 37% up on this time last year.

Currently the USDA only have the EU-27 down to export 8.6% more wheat this season than in 2011/12, yet the pace of shipments versus this time a year ago has been steadily increasing since the beginning of November (see chart).

That would suggest that 2012/13 ending stocks in Europe may ultimately be far tighter than the 10 MMT that the USDA currently have factored in - and that number is the lowest this century.

So who is going to pick up the slack? Not Russia that's for sure, they've just reported Jan 1 grain stocks of 25.3 MMT, down almost 30% on this time a year ago. Rumours persist that they may need to import wheat to see them through to the 2013 harvest, a notion flatly denied by the Deputy PM it has to be said.

Ukraine have also hung up the "sold out" sign now that wheat exports have hit the 6 MMT mark.

The Rosario Grain Exchange today estimated Argentina’s recently harvested wheat crop at just 9.3 MMT, versus a previous estimate of 9.5 MMT and the USDA's current over optimistic looking 11.0 MMT. That's a drop of 40% on last year's 15.5 MMT if the local exchange's forecast is correct, which would obviously impinge on their ability to export the 7.5 MMT in 2012/13 that the USDA are persisting with.

US wheat exports meanwhile do finally seem to have picked up, with the USDA today revealing weekly export sales of 572,500 MT of old crop plus a further 75,000 MT of new crop (most of which was for China). Physical shipments of 559 TMT meanwhile were almost double last week and the 4-week average.

India are newly arrived on the wheat export scene after a succession of record harvests and another potentially on the way, although their reputation in terms of quality is less than sparkling.

Australia still has wheat to sell, although their harvest was down by more than a quarter this season and their prices aren't the most competitive around. Canada also has wheat to market, although it's generally a premium product at a premium price.

Syria are expected to announce the results of their recent wheat tender early next week.