EU Wheat Mixed On The Day, Lower On The Week

19/04/13 -- EU grains spent most of the day with London wheat a little lower and Paris wheat a touch higher. The fact that in euro terms Nov 13 London feed wheat is actually dearer than Nov 13 Paris milling wheat is interesting. This could be a limiting factor for new crop prices in the UK no matter how poor current production prospects look here.

London wheat closed with front month May 13 down a pound at GBP196.00/tonne and new crop Nov 13 up GBP0.15/tonne at GBP186.65/tonne. May 13 Paris wheat closed EUR0.50/tonne firmer at EUR245.50/tonne, further forward months were steadier than that.

For the week that places May 13 London wheat down GBP1.75/tonne, with new crop Nov 13 down GBP0.50/tonne and May 13 Paris wheat EUR4.00/tonne lower.

A long overdue improvement in the weather has seen the proportion of French wheat headed jump from 37% to 69% in a week, although that still remains behind the 99% headed of a year ago. Winter barley headed has advanced from 37% last week to 76% this week, but below the 100% of a year ago. Note though that a warm and early spring had crop conditions well advanced in 2012 when compared with an average year.

Both the French winter grains crops are rated 65% good/excellent, the same as a week ago. In the case of wheat that is also the same as 12 months ago, and for barley it's better than the 57% of 2012.

We've had three analysts release wheat production forecasts for Germany this week, with Strategie Grains estimating a crop of 23.8 MMT versus 22.4 MMT last year. The German Farm Co-op, DRV, predict a crop of 23.2 MMT, whilst Toepfer say 22.87 MMT. Whichever, they are all anticipating an increase on output in 2012. Strategie Grains also gave us an estimate of 36.2 MMT for soft wheat output in France, an increase of 800,000 MT on last year.

The Spanish Ministry yesterday forecast a 31% rise in all wheat production there to 6.65 MMT, along with an increase of 15% in barley output to 6.88 MMT. Rainfall was 43% higher than normal in September-November, followed by normal winter rain, the Ministry say. This has clearly boosted the chances of a strong harvest this year for a country that is traditionally one of Europe's (and in a normal year the UK's) largest wheat buyers.

Ukraine's early spring grains planting campaign (excluding corn) is 71% complete at just over 2 million hectares, say the Ministry there. Grain exports currently stand at just under 20 MMT this season, and may rise to 24-25 MMT by the end of 2012/13, leaving carryover stocks of 5.6 MMT.

In 2013 the yield of winter crops in Ukraine will increase by 15-20% compared with last year, according to the State Weather Centre. The Ukraine Ag Ministry say that 95.5% of winter grain crops in good to satisfactory condition, a huge improvement on a year ago. Rabobank yesterday forecast the Ukraine wheat crop at 22 MMT, up around 40-45% on last year depending on who's 2012 production figure you use.

The Russian Ag Ministry have today increased their grain production estimate for 2013/14 from 90-92 MMT to 95 MMT. Meanwhile the general director of Russian company ProZerno today said that grain production there could rebound 38% to 98 MMT this year, allowing 2013/14 exports of 22-23 MMT. Their exports this season were only 14.15 MMT as at the end of March, and don't look likely to get above 15 MMT by the end of the season, so Russia could end up increasing foreign sales by around 50% in 2013/14 if ProZerno are correct.

They estimate the Russian wheat harvest at 58.5 MMT, an increase of 55% on output in 2012.

Various estimates this week for grain production in Kazakhstan this year range from "at least" 15.2 MMT to "a somewhat conservative" 16 MMT from Rabobank, or around 20-25% higher than in 2012.

Essentially, the "usual suspects" of the cheap Black Sea sellers are all lining up for a sharp rebound in wheat production this year, with most of Europe looking at more modest increases in output - but increases nevertheless. Ukraine will also be an aggressive seller of corn again in 2013/14, in fact they've already begun selling that into Europe, whilst the EU-28's own corn crop was forecast 18% higher by Strategie Grains yesterday.