London Wheat Dips, Paris Wheat Closed

01/05/13 - With the French market closed for the May 1st holiday, this was a limited news sort of a day. London wheat therefore followed the lead of US grains, and subsequently closed lower.

London wheat closed with front month May 13 down GBP1.00/tonne at GBP192.50/tonne and new crop Nov 13 GBP0.95/tonne easier to GBP184.00/tonne.

From an economic perspective the pound hit a fresh 2 1/2 month high against a weak US dollar on nervousness ahead of the outcome of today's Fed policy meeting. Better than expected UK manufacturing data also helped sterling, whilst negative manufacturing numbers from the US and China weighed on the rest of the market in general.

That seemed to encourage a broad-based sell off in most grains throughout the day, dragging London wheat lower with it.

The ECB meet tomorrow to discuss the economic situation in Europe. With Eurozone inflation at a 3-year low, and unemployment at record highs, many expect a 0.25% cut in interest rates to 0.5%.

The HGCA/ADAS released their latest thoughts on UK crop conditions, the highlights of which included that only 2% of the UK winter wheat crop area is at GS32 compared to 25-40% normally.

"Crop quality is variable. Many crops have low plant populations and tiller numbers due to late drilling and wet soils, and about 5% of the area is very poor due to soil compaction and waterlogging," they said.

"Almost 10% of the expected UK wheat area is spring wheat or spring-drilled winter wheat," they added.

As far as spring barley is concerned "an estimated 85% of the planned area was drilled by the end of April, which is quite an achievement given the lack of progress at the end of March" they suggest.

For OSR "About 20% of the planned winter oilseed rape was not drilled, or failed over winter, and a further 10% remains of questionable viability. Late drilling, wet soils, slugs and, more recently, pigeons have all had an impact," they said.

Other reports suggest that a higher percentage of failed/unplanted OSR acreage than this is the reality, throwing into question Oil World's forecast for a UK OSR crop of 2.3 MMT in 2013, even if that is down 10% on last year.

A significant improvement in the UK weather outlook would help. Sky are suggesting that from a temperature point of view this may be on the cards, with 21C possible in the SE on Bank Holiday Monday, although needed rainfall opportunities will be confined to the NW and Scotland. The Met Office say that the weather is set to stay fair until mid-May, when "slightly more unsettled, showery conditions" are forecast.