EU Wheat Slides Lower Ahead Of USDA Report

07/02/13 – EU grains closed mostly lower with Mar 12 London wheat down GBP2.20/tonne to GBP208.30/tonne, benchmark May 13 GBP2.70/tonne lower at GBP209.80/tonne and new crop Nov 13 down GBP1.30/tonne to GBP187.00/tonne. Mar 13 Paris wheat fell EUR1.00/tonne to EUR245.00/tonne.

The market slid lower anxiously waiting for tomorrow's USDA WASDE report, hoping for some much-needed direction. For US wheat the trade is expecting exports to be lowered and ending stocks to rise. On a global level, world ending stocks are expected to decline. Russia's and India's stocks situation will be of interest given developments since last month's report.

The FAO today said that world wheat production in 2012/13 was 662 MMT, some 7.7 MMT more than the USDA said in January, yet they placed ending stocks at 159 MMT which is 7.6 MMT lower than the USDA.

Production prospects for 2013/14 are generally better than last year, they said, noting favourable conditions in India, Russia and Ukraine. EU wheat plantings they see 4-5% higher than in 2012. They did however acknowledge dryness concerns for US wheat.

The Ukraine Ministry said that 96.6% of winter grains there are in good/satisfactory condition, versus 66.8% a year ago. They forecast wheat production in 2013 at 22-23 MMT, a rise of around 42-48% on last year's drought-reduced crop.

US weekly export sales were towards the low end of expectations for wheat at 290,800 MT of old crop and 10,000 MT of new crop. There's talk of US wheat making it's way into unusual homes like Russia and the UK, although there's no official confirmation of either just yet. report that 25,000 MT of US SRW wheat is to be shipped to the UK in March, possibly to Tilbury, the first such consignment for at least 20 years, they say.

Reuters quoted Russia's agriculture minister as saying that the government themselves were considering importing grain itself for the first time in two decades.

Meanwhile EU exports continue to rise unabated. The latest data from Brussels today showed 408,725 MT of soft wheat export licenses were issued this past week, bringing the marketing year-to-date total to 11.68 MMT, almost 40% up on year ago levels.

Syria, Jordan, and Iraq all have wheat tenders pending. Bangladesh issued a new 50 TMT tender. Tunisia bought 92 TMT of optional origin wheat. Thailand bought 50 TMT of Canadian wheat for May-June shipment. Indonesia bought 180 TMT of Australian wheat for April-May shipment. Australia also sold 40,500 MT to South Korea. India continues to offer wheat for international tender. Vietnam bought 37 TMT of Indian corn for March shipment.

MDA CropCast today forecast EU-28 winter wheat production at 132.04 MMT in 2013/14, with OSR output at 18.49 MMT and the barley crop here at 52.9 MMT. All those estimates are unchanged on a week ago.

"Snow cover is beginning to rebuild across central and northeastern Europe as colder temperatures return. Snow cover is melting a bit in FSU as warmer temperatures prevail, and mild temperatures should continue this week. Showers are improving moisture in the Yangtze Valley, which will favour wheat this spring," they said.

Vegetation index maps highlight significantly worse crop conditions in the southern half of the UK and much of northern France, whilst conditions in Spain and Italy show strong improvements compared with a year ago.

Kansas received needed rainfall overnight in central and east areas, but western areas remain very dry. There is hope for a significant rain event Saturday night and Sunday.