EU Grains Mostly Higher On Cyprus Relief

25/03/13 -- EU wheat futures closed mostly higher, seemingly relived that a Cypriot bailout deal got pushed through, even if the finer details remain very sketchy at the moment. The implications further afield than Cyprus may not be anything like as sorted as the market might think however.

On the day, London wheat closed with front month May 13 unchanged at GBP201.50/tonne and with new crop Nov 13 GBP0.35/tonne higher to GBP186.05/tonne. May 13 Paris wheat was up EUR2.00/tonne at EUR243.25/tonne.

Substantial weekend rains and snowfall in the southern US Plains, with the prospect of more to come in the week, was seen a bit bearish for US wheat. That may be true for winter wheat, but Northern spring wheat farms in North Dakota, Minnesota and South Dakota are in jeopardy of serious planting delays, said Martell Crop Projections.

"Cold temperatures and snow in the southwest Midwest will keep soil temperatures cold and will keep fieldwork and early planting of corn and soybeans there very slow. Wet soils in the northern Delta are also keeping planting there slow. Also, very cold temperatures in the southwestern Plains are resulting in some spotty damage there to jointing wheat, mainly in northwest TX and western OK," note MDA CropCast.

FranceAgriMer said that winter wheat crop conditions there are 66% good/very good, unchanged on a week ago and this time last year. Winter barley rated good/very good was 67%, also unchanged on a week ago but up from 53% this time last year. Spring barley plantings only advanced to 64% done from 58% last week and well behind the pace of 86% set last year, hampered by snow and the prevailing cold conditions.

In their first look at EU yield potential for 2013, the EU Commission's MARS unit estimated a rise of 4.4% on last year to an average 5.4 MT/ha for wheat, with barley yields rising 2.3% to 4.46 MT/ha, corn yields up 16.7% to 6.96 MT/ha and OSR yields seen broadly unchanged at 3.1 MT/ha.

"To date, no frost-kill damage has been simulated for EU-27 during the period of review, thanks to light frost events and sufficient snow cover," they note.

In France they said that "the substantial amount of rainfall and low temperatures that occurred during winter have delayed the development of winter cereals in the northern half of the country. Crop growth expectations are normal."

In Germany "a slightly cooler than usual winter with well distributed precipitation should ensure a good start into the season. However, the harsh frosts that occurred during the latest cold snap in March give rise for concern," they suggest.

Meanwhile, in the UK they appear to be of the view that yields will return to normal this year! They forecast wheat yields of 8.02 MT/ha, a 20% increase on last season, with winter barley yields down 1%, spring barley yields up 6% and rapeseed yields rising 3% to 3.5 MT/ha.

In North Africa "the yield forecast for wheat (soft and durum) is significantly higher than the five-year average for the three Maghreb countries (Morocco, Algeria and Tunisia) due to rather wet and mild winter conditions, which favoured a good start to vegetative growth and repletion of soil water capacity," they said.

The Egyptian government are forecasting a domestic wheat crop of a record 9-10 MMT this year, and say that they've set aside 11 billion Egyptian pounds to buy 4.5 MMT of wheat on the local market. With an annual wheat consumption rate of around 18-19 MMT they will still need to import 8-9 MMT this year if they wish to avoid eating into their buffer stocks.

That might be a tall order for the cash-strapped Egyptians who have been exceptionally quiet on the tender front so far in 2013.