Old Crop London Wheat Closes At Lowest Since Early August

26/04/13 - The EU grains market closed mixed but mostly lower on the day, with old crop London wheat pretty friendless. New crop London wheat was supported by questionable production prospects here, even if things are improving on the Continent. The May/Nov spread tonight stands at GBP8.75/tonne, little more than half the  GBP16.50/tonne it was at the start of the month.

London wheat closed with front month May 13 down GBP1.75/tonne at GBP191.00/tonne and new crop Nov 13 GBP0.70/tonne easier to GBP182.25/tonne. May 13 Paris wheat finished EUR1.00/tonne higher at EUR242.50/tonne. For London wheat this was a new lowest close for a front month since the beginning of August 2012.

For the week as a whole May 13 London wheat fell GBP5.00/tonne, with Nov 13 down GBP4.40/tonne and May 13 Paris wheat down EUR3.00/tonne. A stronger pound/weak euro aided French wheat relative to London wheat this week. There's a growing feeling that the ECB may lower interest rates in the Eurozone next week, which is putting the euro under pressure. The pound finished at it's best level against the euro tonight since mid-January.

News that Brussels only issued 237 TMT of soft wheat export licenses this week, the smallest weekly total also since last August, was seen as a sign that demand for EU wheat is starting to wane. News this week that Ukraine, and possibly Russia too, will soon be back in the export market this side of new crop weighed on sentiment. Even so, EU soft wheat exports to date are 47% up on last year at 16.56 MMT.

Also of note was that Brussels granted over 100 TMT of wheat import licenses, with 77 TMT of that coming from the US. Corn imports are also flooding in to Europe, with 9.4 MMT of licenses granted so far in 2012/13, more than double year ago levels.

The Ukraine Ag Minister said that Ukraine would allow a further 0.3-0.5 MMT of wheat exports in 2012/13. Early spring grains there have now been planted on 92% of the planned area, whilst corn plantings are 20% complete and sunseed sowings at a 1.56 million ha are a record area for this time and constitutes 41% of the expected final area. A USDA official earlier this week suggested that both the corn and sunseed crops could set record production highs this year.

French conditions and planting progress have improved with a week of sun on the crops. Winter wheat headed has jumped from 69% last week to 94% this time round, although that still lags 100% from a year ago. Good/excellent is up two points from last week to 67%, which is also two points ahead of last year.

Winter barley headed is up from 76% to 96% (versus 100% last year), with good/excellent up from 65% last week to 66%, and ahead of 59% in 2012. Spring barley tillering is up from 17% to 37% (versus 89% last year), and good/excellent conditions there are up two points from a week ago to 81% (versus 87% in 2012).

French corn plantings have advanced from only 4% last week to 29% complete this week, although that still lags the strong early pace of 65% in 2012.

Jordan are tendering for 150 TMT of milling wheat, having passed on several recent tenders due to price. There's talk that Egypt's GASC might also tender for wheat next week.