EU Wheat Stages Mini Recovery, But Still Lower On The Week

15/02/13 – EU grains closed firmer on the last day of a week when old crop London wheat fell below GBP200/tonne for the first time since mid-October. Despite today's mini recovery Mar 13 London wheat was still GBP3.30/tonne lower on the week, with Nov 13 down GBP0.75/tonne and Mar 13 Paris wheat down EUR1.50/tonne.

On the day Mar 12 London wheat finished up GBP3.00/tonne to GBP204.25/tonne, benchmark May 13 was also GBP3.90/tonne higher at GBP206.75/tonne and new crop Nov 13 GBP2.00/tonne firmer to GBP185.50/tonne. Mar 13 Paris wheat rose EUR1.75/tonne to EUR244.25/tonne.

Heavy fund selling has been the theme of the week across the grain sector, driving US wheat prices to 7 1/2 month lows. Lower prices have drawn out plenty of buyers though, with Algeria, Jordan (twice) and South Korea all issuing new tenders for wheat. Iraq, Syria and Bangladesh also have tenders pending - the Iraqi one closes this weekend.

In addition, newswires are reporting that Brazil and China have both bought US wheat privately this week (yesterday's USDA export sales report did confirm one cargo to China, but more is said to have been done in recent days). On top of that Brussels issued 420,404 MT of soft wheat export licences this past week, as EU exports show absolutely no sign of letting up. This takes the marketing year to date total to 12.1 MMT, which is 44% up on this time a year ago.

That total doesn't yet include the 4-500,000 TMT of most likely French wheat that Algeria bought this week.

Ukraine say that they've shipped 16.9 MMT of grains so far this season, up 46% on year ago levels. That includes their supposed maximum of 6.3 MMT of wheat, and suggests that they will not be active again as a wheat exporter now until new crop comes along. Russia, we know, are out of the export market and are in fact also strongly rumoured to have bought US wheat in the past week.

One country who are extremely active on the export front though are India. They sold a further 200 TMT of their wheat surplus overnight at just over USD310/tonne FOB for loading by the end of next month. With another bumper crop around the corner, and stocks way above the government's minimum levels, they've now begun to start flexing their muscles by selling new crop wheat into Asia too.

That may keep a lid on any potential price rises going forward, although India aren't everybody's cup of tea quality-wise.

Canada are though, albeit at premium money. Their exports in the first 5 months of 2012/13 through to December are near 7.6 MMT, which is up close to 6% versus a year previously. Full season exports could reach 18.75 MMT, according to one Canadian analyst yesterday, which would be the highest since 2006/07.

Rabobank issued new forecasts for Paris wheat price averages this year: Q1 EUR245/tonne; Q2 EUR250/tonne; Q3 EUR204/tonne; Q4 EUR197/tonne.

Note: US markets are closed on Monday for President's Day.