London Wheat Rises As Pound Crashes

01/03/13 -- EU wheat futures closed mixed, with London wheat supported by the pound crashing below 1.50 against the dollar, it's lowest level since July 2010, and to 1.1340 versus the euro, it's weakest since October 2011. Sterling was under pressure following what one analyst described as "shockingly poor" manufacturing data released mid-morning.

On the day London wheat closed with front month Mar 13 up GBP0.85/tonne at GBP203.50/tonne and new crop Nov 13 GBP1.65/tonne higher at GBP187.65/tonne. Mar 13 Paris wheat was EUR1.75/tonne firmer at EUR250.00/tonne.

For the week that puts Mar 13 London wheat five pence lower, with new crop Nov 13 up GBP0.50/tonne and Mar 13 Paris wheat EUR7.00/tonne higher. Paris wheat remains supported by the strong export pace, aided by a weakening euro in dollar terms. Rouen shipped it's largest weekly volume of grain in more than a year in the week through to Wednesday.

For the month of February Paris wheat was 0.4% firmer, compared with Chicago wheat which fell 9.2%. London wheat was 4.5% lower during the month.

ADAS said that a welcome dry spell at the end of February in the UK had allowed some late wheat to get drilled, along with some early nitrogen and some overdue herbicides/fungicides to be applied. Even so Sep/Feb rainfall was 150% of normal, with Dec rainfall 180% of what we would usually expect.

Only 75% of planned winter wheat was sown by the end of November and only 65% of the crop had reached the tillering stage by the end of February, they said. Around 10% of what has managed to get sown is of "questionable viability" and in the case of OSR it's 20%, they added. Growers in the north would say it's substantially more than that.

The wet weather means that slugs have been a huge problem this winter, with many farmers having to resort to multiple applications of slug pellets, they noted. The first spring barley was drilled in the last week of February, they added.

Bloomberg report that France is also suffering from less than ideal weather, having cloud and 15% more rain than normal in the Dec/Feb period, according to Meteo France. France Agrimer said that 66% of the soft wheat crop is in good to excellent condition versus 70% a year ago. They also said that 66% of the winter barley crop is in good to excellent condition versus 63% a year ago.

The EU Commission estimated EU-28 (including Croatia) soft wheat production in 2013/14 at 131.1 MMT, an increase of more than 5% on last year, although yield potential is only forecast at 5.1 MT/ha. The barley crop is forecast only marginally higher than last year at 54.6 MMT.

Canadian spring wheat plantings are forecast to rise 0.9 million acres, or more than 3.5%, to 17.5 million acres this year, according to local analysts Farm Link. Much of that land will come from canola, the area of which is seen falling 1.5 million acres. Farmers will also switch some of this extra area into soybeans, oats and peas, they said.

Russian spring grain planting is just about underway in southern regions, Farmers there are expected to sow 33 million acres of spring grains this year, including failed winter replants.

The Ukraine Farmers Confederation President says that he expects the country to resume wheat exports in April given the domestic stock situation and the outlook for a strong rebound in grain production this year.