London Wheat Slide Continues Aided By Weaker Euro

15/05/13 -- EU grains were mixed in another relatively "no news" day. Tonight was the first sub-GBP190/tonne close for a front month on London wheat since the early days of last August.

London wheat closed the day with front month May 13 down GBP2.00/tonne to GBP189.25/tonne, and with new crop Nov 13 ending GBP0.35/tonne easier at GBP182.05/tonne. Nov 13 Paris wheat ended EUR0.25/tonne higher at EUR210.25/tonne.

The euro was weaker on news that France had entered it's second recession in the past 4 years with the economy shrinking by 0.2% in Q1 of 2013. Even the stalwart Germany only saw economic growth of 0.1% in the first quarter. First quarter Eurozone GDP fell 0.2% from the previous quarter, marking the 6th consecutive quarterly decline.

The BoE said that they expect UK inflation to be within their 2% target rate in the next 2 years, adding that growth is seen a little stronger than it was 3 months ago.

These items depressed London wheat relative to it's Paris counterpart.

UK wheat exports in March were the lowest in more than a decade, and down 78% versus March 2012, according to data from Defra. Imports in March meanwhile were up more than threefold to over 250 TMT, taking the 2012/13 marketing year to date total to 2.12 MMT versus less than 0.67 MMT a year previously.

FranceAgriMer tweaked their 2012/13 ending stocks estimates slightly, cutting wheat carryout from the forecast 2.6 MMT last month to 2.5 MMT this time round. Corn ending stocks were raised 0.1 MMT to 3.1 MMT.

The trade still questions the Friday USDA forecasts for Black Sea wheat production in 2013. Total output for Russia, Kazakhstan, and Ukraine is expected to come in at 93 MMT versus 63.3 MMT last year.

"Unseasonable warmth and dryness in Ukraine and southern Russia has accelerated spring grain planting, but field moisture has rapidly declined. No important rain has occurred in over 2 weeks because of a stabilising ridge of high pressure. Spring temperatures have been abnormally warm, accelerating field drying, frequently exceeding 80 F in May," say Martell Crop Projections.

"Southern Russia winter wheat is stressed by spring drought and heat from the same dominant ridge of high pressure. May maximum temperatures have been 10-15 F above normal. Scanty showers this month have not been sufficient to compensate for high evaporation. Very dry field conditions have developed in the 4 southern winter wheat districts Stavropol, Krasnodar, Rostov and Volgograd. However, unlike Ukraine, Russia’s stored ground moisture is insufficient to support winter wheat growth and development," they add.

SovEcon estimated Russia’s 2013 grain crop at 83-89 MMT, unchanged from their previous estimate. They estimated May and June Russian grain exports at 500 TMT each, versus 480 TMT in April, placing total 2012/13 grain exports at 16.0 MMT compared to an Ag Ministry estimate of 14.8 MMT.