EU Wheat Down Again
Having spent all week waiting for Friday's USDA numbers the trade now seems undecided whether to take them at face value or shoot them full of holes. Not raising US soybean exports this season was perhaps the most questionable number.
Of a more plausible nature was the decision to raise EU-27 wheat exports by 0.5 MMT to 18.5 MMT. That's an increase of 11.65% on last year despite a cut of 4% in production. A corresponding decrease of 0.5 MMT in domestic EU-27 usage kept ending stocks unchanged from last month at 10 MMT, but still down 18.5% on 2011/12. EU-27 corn imports and usage were both raised 2 MMT.
In South America, Brazil's wheat crop was cut by 0.5 MMT, with exports reduced 0.3 MMT and imports raised 0.2 MMT to 7.7 MMT. Less believable was leaving Argentine wheat production unchanged at 11.0 MMT. Brazil said last week that they will allow 1 MMT of wheat to be imported duty free in Apr/Jun from outside the Mercosur trade bloc.
Meanwhile, Russia's grain exports have slowed right up to a trickle. They shipped just 113 TMT in the first week of the month, and only 36 TMT of that was wheat. There's now talk of the government lowering their grain export estimate to around 14 MMT from the existing 15.5 MMT, of which 13.6 MMT has been shipped already.
Which brings us on to the widely circulating, but still unconfirmed, rumours that Russia has bought 100 TMT of US SRW wheat in the past week for shipment into St Petersburg. Given that the Baltic seems now to be more of less sold out, and that French wheat is around USD15/tonne more expensive than US SRW wheat into that region then it is certainly possible that some business has been done.
The USDA lowered their estimate on Kazakhstan's 2012 wheat crop from 10.5 MMT to 9.84 MMT, cutting exports from 7.0 MMT to 6.5 MMT. Kazakh wheat is also a long old way from St Petersburg in north west Russia, and prohibitive over land transport costs probably make it more expensive into that area even than French wheat. Kazakh wheat will still be wanted in Russia, but to nearer by homes.
The Ukraine Ministry said that they may raise their 2012/13 wheat export estimate to 6.3 MMT, with 6.1 MMT of that shipped already, as they try to wring out a little more revenue from the tight old crop situation. Winter grains are rated 91.3% good/satisfactory and winter losses vary between 1-8% depending upon region, they added. That's rather modest, particularly compared to last year.
Bangladesh bought 50 TMT of optional origin wheat, probably Indian, and are tendering for more of the same. Jordan and Ethiopia are also in the market with tenders due tomorrow, followed by Iraq (Feb 17th) and Syria (Mar 4th).
On the weather front in Europe: "Colder temperatures have resulted in a notable increase in snow cover across central and northeastern Europe, especially central and eastern France, Germany, and much of eastern Europe. Meanwhile, heavy rains in southwestern France and northern Spain have resulted in some wetness there. Additional snow is expected across central and northeastern areas this week, especially northern Italy into southwestern Poland," say MDA CropCast.
On the US Plains: "Weekend precipitation was near expectations. Amounts were 0.10" to 0.50” with 20% coverage. The 6-10 day outlook is drier in western crop areas and warmer overall versus Friday’s outlook. The 11-15 day outlook is slightly is slightly wetter overall," they add.
In Argentina: "Weekend rainfall was near expectations. A few showers occurred in southwest Cordoba, western Buenos Aires, and western La Pampa. Amounts were 0.25 to 1.0” locally up to 1.5” with 15% coverage. Light shower activity will provide only minor relief from dryness. Temperatures are forecast to cool across western and central areas in the 6-10 day period. The 6-10 day outlook is wetter and cooler overall." Whist in Brazil it was much wetter: "Weekend rainfall was near expectations. Amounts were 0.25 to 1.5”, locally up to 3.25” with coverage of 70% for corn and soybeans. Somewhat drier weather across northern crop areas will improve harvesting of first corn crop and soybeans. The 6-10 day outlook is drier in central crop areas and cooler in southern areas versus Friday’s outlook," they conclude.
