Nogger's Blog

05/03/13 -– EU grains closed mixed, weighed down by a lethargic US wheat market amidst improving crop conditions there. Recent widespread moisture events on the Plains have seen Oklahoma wheat conditions rise 7 points in a week to 16% good/excellent. Although 47% of the state's winter wheat is rated poor/very poor, that's 8 points better than a week ago. Kansas wheat was up one point in the good/excellent category to 24% and down one in the poor/very poor ratings to 35%.

On the day, London wheat closed with front month Mar 13 downGBP0.25/tonne at GBP201.75/tonne and new crop Nov 13 GBP0.50/tonne lower at GBP184.65/tonne. Mar 13 Paris wheat was EUR1.00/tonne lower at EUR246.25/tonne, May 13 was EUR1.50/tonne firmer at EUR236.25/tonne.

Reuters are reporting that Saudi Arabia's weekend purchase of 575 TMT of hard and soft wheat for Jun/Aug shipment consisted of EU, US and Australian origin grain, which should be supportive.

Russia sold a further 61,629 MT of it's grain intervention stocks today, bringing the total volume sold since sales began in October to 2.13 MMT.

Australia's ABARES released their first estimates on crop production for 2013/14, pegging the world wheat crop 32 MMT higher at 688 MMT, an increase of 4.9% on 2012/13. Consumption is seen rising 2.1% to 686 MMT and ending stocks increasing 1.1% to 176 MMT.

One potential problem looming is a rebound in production from "the usual suspects" when it comes to discount sellers. They estimated output in Russia at 55 MMT, up 41%; Ukraine at 20 MMT, up 27% and Kazakhstan at 16 MMT, up 64%. They also forecast an all wheat crop in the EU of 138 MMT, up 5%; Canada at 28 MMT, up 3% and Argentina at 14 MMT, up 35%. Of all the world's major exporting nations only the US is seen having lower wheat production this year, at 57 MMT that will be a decrease of 7% on 2012/13.

World corn production is forecast to increase by 11% to 944 MMT, predominantly reflecting a forecast recovery in US production, they said. World barley output is forecast up 6% to 138 MMT, led by Ukraine (up 31% to 9 MMT) and Russia (up 17% to 16 MMT). Canada too will see a sharp increase in production - up 14% to 9 MMT. The crop in Europe was forecast to rise by a modest 1% to 55 MMT.

World rapeseed production will rise 5% to 62 MMT this year, they predict. They said that whilst "unfavourable autumn weather caused a decline in the area planted to rapeseed in France and the United Kingdom, this is estimated to be more than offset by an increase in the area planted in Germany, Poland, Denmark, Bulgaria and Romania." EU output was pegged at 19.6 MMT, up 3%, with production in Canada rising 13% to a record 15.2 MMT.

China is forecast to play an increasingly important role in international grains and oilseeds markets in the coming years, they said. They noted that they now account for 28% of world soybean consumption versus only 15% ten years ago. Chinese soybean imports could rise to 76 MMT (currently around 60-63 MMT) and corn imports to 12 MMT (from 2-3 MMT at the moment) by 2017/18, they suggest.

India sold 30 TMT of wheat for March shipment at a reported USD305/tonne FOB. They were said to have only picked up bids around the USD300/tonne mark for a further 75 TMT up for tender for shipment March 15-April 5. They recently scrapped three tenders that only received bids in the USD300-302/tonne range as being too low. They have a week to decide whether to accept or hold out hoping for higher prices. US SRW wheat is said to be offered at USD292/tonne FOB the Gulf of Mexico.

Informa have cut their forecast for wheat production in Morocco this year to 3.75 MMT from an earlier estimate of 5.25 MMT.

There's more talk of Egypt being in financial trouble and looking for a USD4.5 billion loan from the IMF to plug a hole in it's budget deficit. Subsidised bread is said to cost the government USD2.6 billion annually, according to the Finance Ministry, in a country where they consume around 10 MMT more wheat each year than they produce. Their public wheat tenders have slowed to a trickle in 2013.