EU Wheat A Tad Lower, Although Export Pace Supports

Posted by Nogger - a legend in his own mind at 12:14 | Categorized as

05/04/13 -– EU grains closed mostly a little lower, although mounting concerns over new crop prospects and the relentless pace of wheat exports underpinned the market.

London wheat closed with front month May 13 down GBP0.90/tonne at GBP198.60/tonne and new crop Nov 13 GBP0.75/tonne easier at GBP184.25/tonne. May 13 Paris wheat was EUR0.50/tonne lower at EUR243.75/tonne.

For the week May 13 London wheat lost GBP0.65/tonne and Nov 13 fell GBP1.55/tonne whilst May 13 Paris wheat rose EUR5.00/tonne.

Continued euro weakness is boosting wheat exports which now stand at 16.56 MMT versus 11.81 MMT twelve months ago. In 2011/12 Europe finished up exporting 16.6 MMT, or 4.8 MMT more than where we currently stand. Simply matching last season's performance (we are currently 40% up on year ago levels) for the remaining 3 months of the season would give us exports of 21.36 MMT for the 2012/13 campaign - almost 2 MMT more than the USDA currently estimate.

The USDA have an opportunity to revise that estimate in next week's WASDE report, due on Wednesday, and could also likely cut EU-27 ending stocks again this month (they were trimmed by almost half a million tonnes in March) from the existing estimate of 9.5 MMT.

It's no wonder then that the trade is getting edgy over the outlook for European crops for the 2013 harvest. FranceAgriMer say that the proportion of the French winter wheat crop at the headed stage is only 22% versus 86% a year ago. For winter barley it's also only 22% of the crop versus 89% a year ago. They also cut two percentage points off their good/excellent ratings for winter barley to 65% this week.

Both winter wheat and winter barley are only currently 34% emerged versus 84% a year go, although a long overdue break in the weather this week has seen spring barley plantings advance to 97% complete from only 75% a week ago.

Only in the very South of France will you find some soft wheat and winter barley at 2 nodes. This time last year wheat around Paris and barley in Burgundy was already at that stage, say Bloomberg.

A shortage, and the consequent high price of wheat has seen a surge in corn imports usage in the EU this season. It is interesting then that it is now being reported that the Dutch animal feed industry body is advising it's members against using Ukrainian corn in dairy feed due to high levels of aflatoxin found in one shipment last month.

The Ukraine Ag Ministry said that the country has exported 19.7 MMT of grains so far in the 2012/13 season, 25% more than a year ago. They estimate total grain exports at 24.4 MMT versus 22.8 MMT a year ago. Corn has recently overtaken wheat as the country's principal source of grain export revenue.

Meanwhile at home, it seems that the popular media have finally heard that last year's UK wheat crop wasn't too good and that prospects for 2013 aren't overly rosy either. "Exclusive: Britain running out of wheat" says the Independent, it's even made it onto TalkSport this morning, so it must be a good time to get out!