Nogger's Blog

29/04/13 -- EU grains, which were generally only modestly higher in morning trade, moved significantly higher in the afternoon once America woke up.

London wheat closed with front month May 13 up GBP1.50/tonne at GBP192.50/tonne and with new crop Nov 13 rising GBP1.60/tonne to GBP183.55/tonne. May 13 Paris wheat jumped EUR5.75/tonne firmer at EUR248.25/tonne.

The pound set a fresh 3 1/2 month high versus the euro and a 2 1/2 month high against the US dollar, which kept a lid on London wheat price rises.

The warmer and drier forecast that we were looking at on Friday for the US this week looks like being extremely short-lived. Fargo in North Dakota is set for a daytime high of 65F today (from 36F a week ago), but that drops away sharply to a forecast high of only 48F on Wednesday. Cheyenne in Wyoming is in for an even starker turnaround, with highs of 71F today, falling all the way to a high of just 34F in only 48 hours time, say AccuWeather.

Accumulated heavy snow on the northern Plains has melted rapidly over the weekend, causing flooding and potential erosion problems of its own, and now there's more snow and rain in the forecast for the week ahead from North Dakota stretching all the way down to Kansas. North Dakota is the second biggest US wheat state after Kansas.

"Hard freezes in April in Kansas have threatened hard red winter wheat, where development was most advanced, particularly irrigated wheat in southwest Kansas. Jim Shroyer, wheat specialist at Kansas State University, warns some stands may be entirely lost in that district. He also said dry fields and insects are limiting the yield potential of dry-land wheat in western Kansas as much, or more than, the freezes. Extreme drought in Oklahoma affects 31% of the state and severe drought another 54%, according to the US Drought Monitor on April 23," say Martell Crop Projections.

The EU Commission have cut their EU-28 soft wheat production forecast by 100 TMT from last month to 129.7 MMT, although that's still a 5.2% increase on 2012. They cut their barley estimate by 800 TMT from last month to 55.2 MMT, although again that's still an increase of 2.4% on last year. For now they held steady their OSR and corn estimates versus last month at 21.0 MMT (up 8.8% year-on-year) and 65.3 MMT (up 17.9%) respectively.

In the UK they estimate soft wheat production this year at 12.7 MMT, 4.5% down on last year. In France they go 35.2 MMT, in Germany 23.5 MMT, in Poland 9.4 MMT and in Spain 6.2 MMT. For barley they see the UK producing 6.7 MMT this year, if true around 22% more than in 2012. They place the French crop at 10.2 MMT, with Germany producing 9.6 MMT and Spain 7.6 MMT. They also estimated the French corn crop at 15.6 MMT, around 1.6% higher than last year.

In 2012/13 they have EU-27 soft wheat ending stocks at 9.4 MMT, rising slightly to 9.7 MMT by the end of 2013/14. Barley carryout is seen virtually unchanged next season at 6.5 MMT, with corn ending stocks up slightly from 11.2 MMT this year to 11.5 MMT next year.

The US market will be looking to tonight's USDA crop report to give it a few guidelines on how much, if any, damage may have been done to US winter wheat by the recent freeze. It will also be keen to see how much corn planting has progressed from last week's 4% done. Optimism isn't high for either.

It seems a bit early to be locked into a weather market, but there we have it. Meanwhile tentative early forecasts for Europe in the May/Jul period generally seem to be for "cool and wet conditions to become established across much of Western Europe, while Eastern Europe and Western Russia warms up and dries out," according to WSI Weather. Across the Pond, "the summers of 2010-12 were the hottest three consecutive summers in the US since at least 1895," they add. Their tentative forecast for May/Jul there is generally warmer than normal, with the possible exception of the northeast/north central areas.