Nogger's Blog

20/05/13 -- EU grains slid to fresh 11-month lows in thin trade due to public holidays in several European countries including France, Germany and the Netherlands. Even so, the Paris market was open for business, but volume was light.

London wheat closed the day with front month May 13 down GBP3.00/tonne to GBP178.50/tonne, and with new crop Nov 13 ending GBP2.85/tonne easier at GBP176.00/tonne. Nov 13 Paris wheat ended EUR3.00/tonne lower at EUR203.25/tonne. That puts the differential between old crop Jul 13 and new crop Nov 13 London wheat at only GBP2.75/tonne, a month ago that was GBP12.85/tonne, as old crop premiums continue to erode.

"UK new crop feed wheat futures remain at around a GBP5.00/tonne premium Paris milling wheat – against a norm of GBP10-15.00/tonne discount. This pricing relationship is likely to be supportive of new season imports," the HGCA note.

Russia’s IKAR raised their 2013 wheat production forecast from 52.5 MMT to 53.8 MMT. Their total grain crop estimate was increased from a previous estimate of 90.0 MMT to 92.0 MMT, up almost 30% versus 71 MMT last year, despite reports of possible yield reductions in some areas due to dryness.

"Scattered strong showers last week improved prospects in Krasnodar, one of the 4 main winter-wheat districts. The new forecast calls for more beneficial rain in southern Russia," said Martell Crop Projections.

That may help the early strong pace of Russian spring grain plantings, but which have slowed dramatically in recent weeks, pick up again. Spring grains have now been planted on 15.7 million hectares, or 51.9% of the total planned area as of Friday, 11.5% less than on the same date last year, according to the local Ministry.

The Ukraine Ministry said that their Jul 12/Apr 13 grain exports were 21.5 MMT, including 12.2 MMT of corn, 6.83 MMT of wheat and 2.1 MMT of barley. They said that they expect to export a further 2.33 MMT of corn, 184 TMT of wheat and 73 TMT of barley in the last two months of the marketing year. If so that would place full season exports at around 14.53 MMT of corn (versus the USDA estimate of 13.5 MMT), 7.0 MMT of wheat (7.0 MMT) and 2.17 MMT of barley (2.2 MMT).

Agritend estimated Argentina’s 2013/14 wheat area at 4.0–4.2 million hectares versus the Buenos Aires Grain Exchange estimate of 3.9 million and up 11-17% versus 3.6 million in 2012/13. Planting is now underway and conditions are said to be more or less ideal.

CBH said Australia’s 2013/14 wheat crop will increase by 16% this year.

There's been a lot of talk lately about cash-strapped Egypt, the world's largest wheat importer, wanting to become self-sufficient for their wheat needs within 4 years. They usually import around 8-10 MMT a year but that is expected to halve this year, falling to only 4-5 MMT.

Oil World pegged the world OSR crop at a record 64 MMT, up 2.2% on last year. Despite the UK crop falling almost 27% on last year, Europe's output will rise 3.1% to 19.9 MMT led by a rebound in production in Germany and Poland, they said.

The market is now focused on tonight's planting progress report from the USDA, particularly in relation to corn planting which is seen increasing sharply from week ago levels of 28% to around 60-70% complete.