EU Wheat Extends Declines As Crop Prospects Improve

16/05/13 -- EU grains closed lower as production prospects around the world improve. MDA CropCast today increased their global wheat production estimate by 6 MMT from last week, upping their coarse grain forecast by 12.7 MMT from a week ago and raising their world oilseed output forecast by 6.6 MMT versus last Thursday.

May 13 London wheat finished GBP4.00/tonne lower at GBP185.25/tonne and new crop Nov 13 ended GBP2.70/tonne weaker at GBP179.35/tonne. Nov 13 Paris wheat settled EUR1.75/tonne easier at EUR208.50/tonne. For Nov 13 London wheat a close at this level tomorrow would be the contract's lowest close on the weekly chart since mid-October. Even so, Nov 13 London feed wheat is still priced at a premium to Nov 13 Paris milling wheat.

Despite a steady decline since early November, London what has actually fared significantly better than US or French grain during this period. Front month London wheat is "only" down 16% since Nov 8, versus a decline of 25 % in Paris and 24% in Chicago.

Germany's DRV increased their 2013 grain production estimate from 44.4 MMT last month to 45.5 MMT this time round. Their all wheat crop estimate was 23.8 MMT, up 6.1% on last year, with the 2013 OSR crop forecast at 5.36 MMT, an 11.6% increase on 2012.

Ukraine's 2012/13 grain exports currently stand at 21.27 MMT, up 13.8%, and will reach 24.4 MMT by the end of the season, according to the local Ministry. May 1st grain stocks were 8.4 MMT, down 39% on year ago levels.

The leading French grain hub of Rouen exported only 87,774 MT of grains in the week through to Wednesday, down 58% on last week, The total included 55,245 MT of soft wheat, most of which (50,845 MT) was headed for Algeria and the rest (4,400 MT) is coming to the UK.

MDA CropCast forecast the world wheat crop at 680.2 MMT in 2013/14, up nearly 7% on last year. The EU soft wheat crop was pegged at 131.3 MMT, a rise of 3.7% on 2012. They forecast the world corn crop at 912.4 MMT, up 12.8 MMT on last week and up 11.4% on year ago levels. They see the EU barley crop at 54.7 MMT, up 3.8% on last year.

Expectations for much needed rainfall for this weekend and early next week for the drier areas of Ukraine and Russia also had the market under pressure today. MDA CropCast have the Russian wheat crop at 52.5 MMT (up 39% on last year), the Ukraine crop at 20.6 MMT (up 33%) and Kazakhstan output at 15.0 MMT (up 55%) in 2013.

Comments back from people on the ground over there are Ukraine: "About normal for winter cereals and rape; some good, some not so good" and in southern Russia: "1st wheat looking OK, 2nd wheat looking average. More wheat than last year but definitely not a bumper crop."

Bangladesh bought 50,000 MT cargo of optional-origin wheat from Indian trading house Amira Foods, suggesting that India may be finally capitulating in the face of declining global wheat prices.