EU Wheat Mixed, UK Crops Downgraded But Elsewhere Things Looking Better

30/05/13 - EU grains were mixed, but mostly a little firmer. News that GMO wheat had been found growing in an Oregon field 8 years after trials ceased unsettled the US market, particularly as Japan immediately announced that it was suspending the purchase of US winter white wheat (and feed wheat) on the back of it.

That could be viewed as supportive for other origin wheats. Around 80% of EU wheat imports from the US are soft white wheat.

London wheat closed with Jul 13 up GBP2.00/tonne at GBP183.50/tonne and Nov 13 up GBP0.10/tonne at GBP177.50/tonne. Paris wheat closed with front month Nov 13 unchanged at EUR204.50/tonne.

Toepfer estimate the UK wheat crop at 11.56 MMT this year, down 13% on last season's 13.31 MMT. They have the 2013 UK OSR crop at 1.88 MMT, down 27% on 2.56 MMT last year.

Yet again though we need to remind ourselves that just because the UK is having a fairly torrid time of it, that isn't necessarily true elsewhere, and therefore that doesn't mean that prices can only go up from hereon in. FCStone said that Spain's winter barley harvest will start within the next two weeks under "near perfect" conditions and that a bumper harvest is expected.

Toepfer have the EU-28 soft wheat crop estimated at 129.79 MMT, up 3.5% from last year. MDA CropCast go for 131.3 MMT, an increase of 3.7% versus 2012. The latter also forecast a barley crop here in Europe of 54.7 MMT, up 3.8%, and a corn crop of 58.0 MMT, up 7%.

Apart from the US, where wheat output in 2013 is seen down 9.5%, almost all the other major wheat exporting nations will see significant production increases this year, they say. Kazakhstan's output will rise 55% to 15.0 MMT, with Russia's up 39%, Ukraine's up 33%. Argentina's up 25% and Canada's rising by 12.5%, they estimate.

MDA CropCast have also today trimmed slightly their 2013 US corn production estimate by 0.6 MMT to 338.6 MMT due to acreage reductions, although that's still up a whopping 30.4% vs. 2012.

EU crop conditions have been dogged by cool and wet weather throughout May, but a return to at least warmer conditions could be around the corner once we get the weekend out of the way. UK, French and German day time highs are forecast to reach 68-70F Monday through to Wednesday next week, with temperatures in Poland in the 70-73F range.

Low levels of winterkill have the German Stats Office forecasting the 2013 winter wheat harvested area at just over 3 million hectares, up 6.5% on last year. Winter barley is seen at 1.23 million ha, up 13% and the OSR area at 1.44 million ha, up 10%.

The Ukraine Ministry said that sugar beet plantings there are down from 516,000 ha two years ago to 450,000 last year and only 300,000 ha in 2013 due to better potential returns from cereals and depressed local sugar prices. Much of this extra area is seen going into wheat. It's a similar situation in Russia where the 2013 sugar beet area is forecast down 15-20% on last year.

Perth, WA, to midday today has received 138mm of rain this month - its wettest May since 2005. There's also heavy rain in the forecast for SA today/tomorrow moving into NSW and VIC across the weekend.

At home, for winter wheat the HGCA reported "improved growing conditions from mid-April and during May allowed crops to catch up a little following late drilling and the cold spring, but development is still 10-14 days behind normal at the end of May."

For spring barley they noted "drilling continued into May, with farmers taking late decisions to replace failed wheat and rape crops. An estimated 100-140,000ha was drilled in May, compared to typically 35-50,000ha in more recent years."

For OSR they said that "in some regions it is estimated that of the area planted in the autumn up to 25% has already been replaced and a further 15% is patchy, thin and unlikely to yield well. However, the majority of remaining crops are in reasonable condition, especially crops established early, and even some of the poor crops have improved over the last month."