Nogger's Blog

17/04/13 -- EU grains closed mostly firmer with London wheat supported by the pound slumping to a one month low against the euro on the back news that UK unemployment rose to 2.56 million at the end of February. Also undermining the pound was news that the Bank of England's MPC were split 6-3 again this month on whether or not to raise QE. Once more, BoE Governor King wanted a GBP25 billion increase to try to stimulate Britain's fragile economy.

On the day, May 13 London wheat closed up GBP0.25/tonne at GBP198.00/tonne and with new crop Nov 13 up GBP0.35/tonne to GBP186.30/tonne. May 13 Paris wheat settled EUR0.50/tonne higher at EUR246.75/tonne.

The long awaited arrival of spring could prove to be a false dawn, for northern and western Europe at least. Highs in the mid-70's in northern France and Germany today will give way to daytime highs only in the mid-50's by the weekend. Meanwhile many of us in the UK could be waking up to a frost on Saturday morning, according to the BBC.

The German Farm Co-operative Deutsche Raiffeisenverband, or DRV, today trimmed their forecast for grain production there from a previous estimate of 45.1 MMT to 44.4 MMT, saying that crop development was 2-4 weeks behind schedule. They did however say that there was still time for some of this lost ground to be made up, and that significant winterkill instances were only isolated.

They cut their German all wheat forecast from 23.6 MMT to 23.2 MMT, although that's still up 8.4% on last year's 21.4 MMT, aided by plantings 3% higher. Winter and spring barley production combined was estimated down from 9.95 MMT previously to 9.75 MMT, a 6.25% fall on 2012 (planted area is seen down 6.1%). OSR output was forecast down from 5.39 MMT previously to 5.15 MMT, up 7.3% on last year thanks to a similar rise in acreage.

They say that German farmers have used the favourable weather conditions in recent days to step up their spring plantings and that they are hoping for "constant spring temperatures with adequate rainfall, so that the crops can be at least partially make up for the lagging growth again and fully develop the existing yield potential."

Cash-strapped Egypt said that they have wheat reserves of 1.74 MMT on hand, which is enough to last them 71 days, with a further 120 TMT on the way. That takes supplies up to only 75 days of usage, whereas they would normally carry around 6 months worth. There are reports that they may strike some sort of deal with Russia to supply them new crop grain, but the details are sketchy. There's also been talk of Kazakhstan possibly extending Egypt some sort of credit facility to buy grain and a loan of sorts from Qatar.

Spring planting is underway in Russia, with 1.45 million hectares in the ground already. That's 4.8% of the planned area, and ahead of last year's pace. The total spring planted area is estimated at 33 million ha. Dryness concerns in the south are starting to get a mention.

The Russian government sold a further 55,907 MT of intervention grain at auction today, bringing the total volume sold so far since sales began to almost 2.9 MMT. The Russian PM said that the country could produce 90-95 MMT of grains this year given favourable weather, versus 71 MMT a year ago.

Ukraine's early spring plantings are also progressing well, now that the snow has melted, at 61% complete. Most of the 1.77 million hectares that has been planted so far is spring barley (1.49 million ha), with smaller areas of wheat, oats and peas. Around 5% of the planned sunseed area is also planted, with corn sowing yet to get underway.

Morocco are tendering for 50 TMT of EU durum wheat. Bangladesh are tendering for 50 TMT of optional origin wheat and Jordan are in for 100 TMT each of optional origin wheat and barley.

Early concerns over dryness in Australia ahead of planting of winter wheat are prompting some analysts to already question ABARES 2013/14 wheat production estimate of 24.9 MMT. Australia's 2012/13 wheat ending stocks are seen at only 3.0 MMT versus 8.0 MMT a year previously. Lower carry-in and reduced output in 2013/14 could see next season's wheat exports fall to around 14-15 MMT versus 19.0 MMT in 2012/13 and the 2011/12 record of 23.0 MMT, some are estimating.

Large parts of the US remain unseasonably cold. "Very cold spring weather in the Eastern Midwest has given way to more seasonable temperatures, but west of the Mississippi River stubborn cold is hanging on. Really cold. In Nebraska, the US's 3rd biggest corn state, temperatures are expected to fall 25 F below normal as a fresh cold wave hits the state. Night-time temperatures in the low-mid 20s F would are predicted both tonight and Thursday night, freezing fields through a very deep layer," say Martell Crop Projections.