EU Wheat Extends Slide As Global Production Prospects Improve

24/04/13 -- EU grains spent most of the day on the defensive again, with May 13 London wheat slipping to lows not seen since last July, as production prospects in many places around the globe improve.

London wheat closed with front month May 13 down GBP1.05/tonne at GBP192.00/tonne and new crop Nov 13 down GBP1.15/tonne at GBP182.85/tonne. May 13 Paris wheat closed EUR1.25/tonne lower at EUR239.75/tonne.

Stats Canada released their 2013 prospective plantings estimates today, estimating the all wheat area 2.2 million acres - much more than the average trade guess (24.4 mln) and significantly higher even than the highest trade forecast (25.2 mln) at 26.6 million acres. That represents a jump of 12% on last year. Much of this extra area is seen coming from reduced rapeseed plantings, which are forecast down from 21.5 million last year to 19.1 million in 2013. Paris rapeseed futures rose on the news.

Things are looking up in Eastern Europe, with the USDA attaché in Romania forecasting a rebound of 22% in wheat production and 19% in barley output this year. Decent rains in recent months have helped replenish soil moisture reserves there, they say.

In Ukraine prospects for the 2013 harvest are "very optimistic" said one USDA analyst in Odessa. Corn production there could come in at a record 26 MMT this year, which would be up by almost a quarter on last year. They could also chip in with a record sunseed crop of 11 MMT, up 22% on last year, he added, whilst stressing that these were his personal forecasts and won't necessarily correspond with the USDA's May WASDE estimates due out on May 10.

Separately, Oil World forecast a 54% hike in rapeseed production in Ukraine in 2013, according to a report on Bloomberg today.

The Ukraine Ag Ministry said that 685,000 ha of corn and 1.3 million ha of sunseed has been planted there so far. Meanwhile the planting of early spring grains, which excludes such crops, is 89% complete at 2.6 million ha, they said. Almost 93% of winter grains are in good/satisfactory condition, they added.

Some report today said that the Ukraine government have lifted their ceiling on wheat exports by a further 200,000 MT for 2012/13. Other reports suggest that "all limits" have been lifted and that these could now rise close to 7.0 MMT by the end of the season. Grain exports in 2012/13 to date are 20.5 MMT, including 6.46 MMT of wheat, as well as 11.6 MMT of corn and 2.04 MMT of barley.

Morocco's grain harvest is seen jumping 90% this year to 9.7 MMT on favourable winter conditions. Last year's drought-hit crop was only 5.1 MMT. Wheat production is also forecast to rise 90% to 5.2 MMT. MARS said on Monday that promising cereal production prospects exist in Turkey, Morocco, Algeria, and north Tunisia, all of which have had average or above average rainfall across the winter.

Elsewhere Lanworth Inc forecast Australian wheat production in 2013/14 at 25 MMT, an increase of 13% on last year. They did however trim slightly their estimate for US wheat production in light of potential freeze damage from 2.02 billion bushels to 2.007 billion (54.6 MMT), which would be 11.6% down on output in 2012.

More than compensating for that was a rise in predicted US corn production this year. Lanworth increased their estimate from 13.72 billion bushels to 13.93 billion (353.8 MMT), which would easily set a new record and beat last year's output by a whopping 80 MMT, or 29%.