Lose Ten Pounds In Three Days With The London Wheat Diet!

17/05/13 - Friday was another bad day at the office for London wheat, particularly old crop, which has now slumped almost ten pounds in the past three sessions. There's been a bit of debate around for some time as to whether old crop prices would come down to meet new crop, or if the latter would rise to meet the former. Now it looks like we have the answer.

London wheat closed with front month May 13 down GBP3.75/tonne to GBP181.50/tonne and new crop Nov 13 down a more modest GBP0.50/tonne to GBP178.85/tonne. Paris wheat closed with front month Nov 13 EUR2.25/tonne easier at EUR206.25/tonne.

For the week overall it's been pretty brutal for May 13 London wheat which is down GBP9.75/tonne, with all of those losses coming in the last three days of the week. New crop Nov 13 fared somewhat better, closing the week GBP2.65/tonne lower in London and down EUR2.50/tonne in Paris.

For May 13 London wheat this was the lowest close on the weekly chart since the last week of June 2012. For new crop Nov 13 London wheat it was the lowest close on the weekly chart since mid-October 2012.

Note that Nov 13 Paris milling wheat closed at a sterling equivalent of under GBP175.00/tonne, making London feed wheat still a premium of almost GBP4.00/tonne to it, despite this week's losses.

Brussels issued 213 TMT of soft wheat export licenses this week. Whilst the pace is finally slowing, year to date exports for 2012/13 stand at 17.4 MMT, up over 47% versus year ago levels. As wheat pours out of Europe though, corn pours in. Corn imports currently stand at 9.85 MMT, an increase of more than 100% compared with last season.

As far as crop conditions at home are concerned, "there is certainly a sense of improvement over the last month. Bare patches aside, many winter cereal crops are now seen in good condition, although development is still delayed," said the HGCA. "The situation is less clear for winter oilseed rape," they noted. Indeed it is.

Across the Channel FranceAgriMer report the percentage of winter wheat displaying 2 nodes is up from 74% a week ago to 93% as of May 13, although still a little behind the 99% of a year ago. The crop is 8% headed versus 27% this time last year.

Winter barley at the headed stage is up from 12% a week ago to 46%, although again this lags last year's proportion (when all the crops were particularly forward) of 89%. Spring barley displaying an ear of at least 1cm is 45% versus 19% a week ago and 88% in 2012. Corn planting has advanced from 67% last week to 81%, which is actually marginally ahead of year ago levels of 79%.

The proportion of French winter wheat rated good/excellent increased one percentage point on last week to 67%, versus 69% a year ago. Winter barley good/excellent was also up a point on last week to 67%, versus 62% in 2012. Spring barley rated good/excellent was unchanged on a week ago at 80%, versus 89% this time last year.

In international news Iran's wheat imports are forecast to plunge to just 1 MMT in 2013/14, compared with 6 MMT this season. Officials say that nearly half of the 2012/13 imports were for rebuilding government-owned stocks and that this year’s production outlook is also set to improve significantly from year ago levels.

Next week's price direction is likely to be governed by the weather. The trade is expecting big strides to have been made with US corn planting, possibly record strides, when the USDA issue their weekly crop progress report on Monday night. Planting as of last Sunday night was 28% done, trade estimates put this week's figure at anywhere between 50-70% complete.

Needed rain is in the forecast for Russia and Ukraine, with the latter set to get up to 2 inch totals between now and the end of the month. Crop conditions in Kazakhstan are said to be favourable.