EU Grains Mixed, May/Nov Spread Narrows

03/05/13 -- EU grains closed mixed with May 13 London wheat finishing GBP0.25/tonne lower at GBP191.75/tonne and with new crop Nov 13 GBP0.55/tonne firmer to GBP184.55/tonne. May 13 Paris wheat settled EUR4.25/tonne lower at EUR248.75/tonne, although new crop months were EUR0.25-0.50/tonne firmer.

For the week, May 13 London wheat closed GBP0.75/tonne higher, whilst Nov 13 was GBP2.30/tonne firmer, further narrowing the Man/Nov spread to GBP7.20/tonne from GBP8.85/tonne a week ago and GBP16.50/tonne at the beginning of April. May 13 Paris wheat was EUR6.25/tonne higher for the week.

French wheat crop conditions were little changed, with 68% of the crop now rated good/excellent, the same as last week. Poor/very poor improved slightly from 10% to 9%. Winter barley ratings were the same as a week ago at 66% good/excellent and 9% poor/very poor. All of those are very similar to year ago levels.

Spring barley good/excellent fell one point from last week to 80%, and versus 88% this time last year. There are no ratings for corn yet.

Almost all (99%) the winter wheat crop now has an ear of at least 1 cm and 45% has 2 nodes, up from 23% last week but still lagging 87% a year ago. All the winter barley crop has an ear of at least 1 cm and 68% has 2 nodes versus 31% last week and 97% a year ago. Only 4% of the winter barley is heading versus 18% a year ago. It should be noted though that all crops were particularly well advanced a year ago.

Only 61% of the French spring barley crop is at the early tillering stage versus 96% a year ago. Corn planting advanced from 29% complete last week to 57% done, and has now almost caught up with the pace of a year ago (60%).

Informa Economics came out with their world production numbers today, estimating the EU wheat crop at 138 MMT, up 4.5% versus 132 MMT a year ago.

They estimated the global wheat crop for 2013/14 at 705 MMT, up 51 MMT or 7.8%  from a year ago. They said that the world corn crop would come in at a record 966 MMT, up 110 MMT or almost 13% from a year ago. The Ukraine corn crop was estimated at a record 24.5 MMT. Global barley production estimated at 137.2 MMT, up 7 MMT or 5.4% from a year ago.

Increases in world cereal production levels of this magnitude should ultimately weigh on prices once the harvest is in, although there's perhaps enough uncertainty around for the time being to prevent prices from slipping too far back.

London markets will be closed on Monday for the May Day bank holiday, but Paris and Chicago will trade as normal. The USDA issue their May WASDE report next Friday which should also include their first projections for production in the 2013/14 crop year. At this early stage they are frequently bullish about production prospects, so this could be a bearish report as far as prices are concerned.