EU Wheat Declines Following US Lead

08/05/13 -- EU grains closed mixed but mostly lower, failing to hold onto early gains as US markets nudged into the red in afternoon trade. The market is nervous ahead of Friday's upcoming USDA report which will include their first glimpse into production prospects for 2013/14.

May 13 London wheat finished GBP0.75/tonne lower at GBP190.50/tonne and with new crop Nov 13 GBP1.10/tonne easier to GBP181.65/tonne. May 13 Paris wheat settled EUR3.50/tonne lower at EUR242.25/tonne.

May 13 Paris wheat expires on Friday, which may have led to some technical weakness today. Open interest in that was over 3,500 lots as of last night, as opposed to only 8 in the case of May 13 London wheat. Trade was thin with many French participants away on holiday despite the MATIF market being open.

Western Australia got it's forecast significant rain event as "many places saw their heaviest rain in almost a decade" according to Perth got 54 mm in 24 hours. This same weather system is seen bringing rain to South Australia at the weekend, and more precipitation for NWS and Victoria early next week.

Parts of Ukraine and Russia are still dry, but morning weather maps showed an improved chance for showers in the driest regions of southern Russia in the next 7-10 days. UkrAgroConsult said that dry and windy conditions mean that there are water shortages in some areas of Ukraine, but noted that these are mainly in the south east where spring planting is more or less complete. The Ukraine Ag Ministry forecast the corn area this year at 4.7 million hectares, of which 3.8 million is already sown. Plantings last year were 4.37 million ha.

The Ukraine Ministry also said that grain exports in the 2012/13 marketing year to date now stand at 21 MMT, up 14.3% on year ago levels. Corn exports are currently 12 MMT and wheat exports 6.56 MMT.

UkrAgroConsult forecast the local 2013 OSR crop at 2.01 MMT, up by more than two thirds on last year. This year's sunflower crop will rise from 8.57 MMT to 9.86 MMT, they add. Wheat production is now seen at 20.16 MMT, down slightly from their previous forecast, although well up on last year's 15.76 MMT.

Oil World meanwhile say that Russian oilseed plantings are well ahead of year ago levels, which could equate into production rivalling the record levels of 2011. Sunflower plantings are 37% complete at 2.4 million ha, with OSR sowings 24% done at 273,000 ha the Ministry said yesterday.

Lanworth Inc today estimated the Ukraine wheat crop at 23.3 MMT, down 1.4 MMT on last month but almost 48% up on last year. They place Russian wheat output at 50.8 MMT, a near 35% rise on 2012.

Russian old crop stocks are running dry, customs data out today shows that they exported only 424,700 MT of wheat in the Q1 of 2013 versus 3.196 MMT a year ago.

India said that May 1 wheat stocks in government stores jumped by more than three quarters versus Apr 1 to 42.7 MMT, putting them under pressure to revise down their price ideas to shift some stock in their ongoing wheat tenders.

Weather conditions in France and Germany remain mostly favourable, although crop maturity is lagging.

Friday's USDA WASDE report is seen pegging world 2013/13 wheat ending stocks at 181.5 MMT versus the 2011/12 ending stocks of 199.4 MMT. For 2013/14 these are seen rising to 186.4 MMT from within a range of estimates of 178.1-195.8 MMT.