London Wheat Ends At 8-Month Low On Talk Of Black Sea Return To Market
23/04/13 - The EU grains market was under pressure all day on talk of improving crop conditions in Europe and a better weather outlook for the US Midwest in the week ahead. There's also talk of Russia and Ukraine both potentially re-entering the wheat export market, adding to the negative tone.
London wheat closed with front month May 13 down GBP2.45/tonne at GBP193.05/tonne and new crop Nov 13 was GBP0.50/tonne easier at GBP184.00/tonne. May 13 Paris wheat finished EUR2.75/tonne lower at EUR241.00/tonne. For London wheat this was the lowest close for a front month since last August.
The Russian Ministry said that they were to reduce their weekly intervention grain offering as domestic prices have fallen as local demand is waning. SovEcon said that Russian wheat prices were now low enough to maybe allow exports to resume to the tune of "a few hundred thousand tonnes" between now and the end of the current marketing year. To date 2012/13 grain exports are at 14.32 MMT, 40% down on last year. The General Director of Russia's ProZerno said that prices for 3rd grade wheat there may fall a further 10-15% in the next month or two from the current 9,700 roubles/tonne as the 2013 harvest approaches and old crop prices give up some more of their premium.
Ukraine's Ag Minister said that they may allow wheat exports to begin again mid-May, with trade talk of a further 500,000 MT of what may largely be government-owned stocks coming back onto the market before prices there feel the effect of too much harvest pressure.
Meanwhile spring grain planting in Kazakhstan is underway, with around 300k ha in the ground so far, out of an expected spring wheat area of 13 million ha, along with 1.6 million ha of spring barley. Soil moisture levels are significantly better than they were 12 months ago.
The weather forecast calls for the dry pattern of the past week or so to continue in Ukraine and the European part of Russia, which will aid fieldwork and is seen as being favourable (for now) for spring plantings to proceed in a timely manner. They won't want this dry spell to continue for too long of course.
Europe has finally trended a bit warmer and drier too, which will allow winter crop development to maybe catch up a bit, and also see significant spring planting progress. Crop development ratings in France still lag year ago levels, but did jump significantly in Friday's report versus a week previously. Similar improvement may be on the cards again this week.
Deep snow on the northern US Plains and Canadian Prairies will delay spring plantings there. Meanwhile the Central and Southern Plains could be in for another freeze tonight/tomorrow before things finally warm up in the 6-10 day time frame. Rain and snow continues to maintain a beneficial moisture supply in the Midwest, although this is also hampering fieldwork and spring plantings. The US corn crop was only 4% planted as of Sunday night, according to the USDA. However, it was only 5% complete in 2009 at this time and yields finished up at a record 165 bu/acre!
Reuters reported that Russia has agreed to finance and build a storage facility in Egypt to house Russian grain to sell to either Egypt or other North African buyers, although no time frame was mentioned.
Egypt's state wheat imports are seen falling 35% to 3.4 MMT this marketing year (Jul/Jun), with private sector imports forecast 33% lower as the country struggles to finance purchases on the international market. The Industry and Trade Minister repeated Egypt's bullish forecast for a domestic wheat crop of 10 MMT this year, and said that the country aims to be self sufficient in wheat production within 2-3 years. He didn't say how they were going to achieve this goal, and most would see this claim as no more than political posturing.
The EU-27 rapeseed crush in Jul 12/Feb 13 was 15.5 MMT, an increase of 4.7% on last season, say Oil World. The French OSR harvested area is seen falling 5.6% on last year to 1.517 million hectares, say the Ag Ministry there. Even so, this would still be higher than the 5-year average of 1.505 million.
