EU Wheat Higher After Yo-Yo Session

30/04/13 -- It was a yo-yo sort of a day to end the month, as is befitting of a weather market. Early follow though gains in the overnight Globex session saw EU grains open higher, only to slip back into the red once the daytime open outcry Chicago session quickly turned lower. Towards the close of European trading however much of the CBOT session was back in the green, dragging EU grains back up off the lows of the day and into positive territory again.

At the close May 13 London wheat finished GBP1.00/tonne higher at GBP193.50/tonne and with new crop Nov 13 GBP1.10/tonne firmer to GBP184.95/tonne. May 13 Paris wheat settled EUR4.00/tonne higher at EUR252.25/tonne.

Paris wheat is following Chicago wheat which is following Chicago corn, and London wheat is dithering about looking at all the others and then the exchange rate and then dithering some more.

In short, the market is all over the place. Based on last night's closes May 13 London wheat was down 8.4% on the year so far, Nov 13 is down only 1.39% and Nov 14 is up 3.5%. In the same period for Paris wheat we have May 13 down 0.2%, Nov 13  down 6.0% and Nov 14  down 5.7%.

What we do know is that corn planting in the US so far is matching the record slowest set in 1984 at just 5% complete. Given this week's weather forecast it looks like it may be setting a fresh record all of it's own by the time next week's USDA planting progress report comes out. However, at this very early stage all is not lost. In 1984 next week's planting number was 10%, planting was slow throughout the whole spring but yields still ended 2% above the trendline, point out Agrivisor.

How much difference these planting delays will make at the end of the day is pure conjecture at the moment of course. Some of the Midwest states currently unable to plant were complaining of unresolved drought only a month or two ago. Lanworth and Rabobank are currently both forecasting as US corn crop of just over 13.9 billion bushels this year, that's around 29% higher than last year. So what if we lose the currently mooted 250-500,000 acres, or even a million acres, some might say.

For US winter wheat we now have the crop showing the worst ratings for the last week in April since 1996. US exports are in line to reach, or maybe even beat slightly, the USDA forecast for the 2012/13 season. Ending stocks however are still more than adequate, and US exports could struggle to compete with new crop Black Sea supplies in the second half of the year.

There we have estimates for Russian wheat production ranging from 50 MMT at the low end to 58.5 MMT at the upper end of the scale. That's a rebound of 33% versus last year even if we use the lower estimate, and 55% if we use the upper one. Ukraine and Kazakhstan also look set to see a sharp increase in wheat production this year. Meanwhile, Stats Canada forecast plantings there up 12% and the EU Commission last week pegged output here up more than 5% on 2012.

Barring a repeat of either historic drought, and/or flooding of Biblical proportions in the US this year, it's therefore difficult to imagine anything other than a strong rebound in global wheat and corn supplies for 2013/14 - the EU Commission also gave us an estimate for corn production here up 18% this year in last week's report.

Then again, it all looked pretty similar this time 12 months ago, and we know what happened then!