London Wheat Crashes To Near 1-Year Low

07/06/13 - EU grains closed lower with Jul 13 London wheat down GBP2.50/tonne at GBP174.00/tonne and Nov 13 down GBP0.35/tonne at GBP175.25/tonne. Paris wheat closed with front month Nov 13 EUR0.50/tonne easier at EUR203.75/tonne.

For the week that pegs Jul 13 London wheat down GBP8.50/tonne, with Nov GBP3.25/tonne lower and Nov 13 Paris wheat slipping EUR2.25/tonne.

This was the lowest close for a front month on London wheat for almost a year. The pound rising to a 4-month high versus the US dollar didn't help.

US wheat meanwhile seems to be attempting to paddle it's own canoe, concentrating on the problems there with both winter and spring wheat. Plantings of the latter in North Dakota are the slowest since at least 1981, Bloomberg reported yesterday. Across the border things are much better though, with Saskatchewan spring wheat 83% sown, in line with 82% normally and up 26 points from a week previously. Elsewhere there is also reason for optimism regarding prospects for 2013/14.

Black Sea spring grain plantings have also caught up. Ukraine is finished, Kazakhstan is all but done at 99.8% complete and Russian growers have now sown 29.6 million hectares, or 97.6% of the intended area (including a record corn area).

Winter wheat planting in Argentina is underway at 19.4% complete, up from 9.0% a week ago and above the 11.1% planted this time last year. Conditions are said to be near ideal. The Ministry say that they expect to see plantings rise from 3.16 million hectares last year to 4.0 million in 2013/14, an increase of 26.6%. The Buenos Aires Grains Exchange are not far behind predicting an area of 3.9 million ha.

Brazil's CONAB forecast a 2013/14 wheat crop of 5.56 MMT, up from the 5.4 MMT that they estimated previously and 27% more than last year's output of 4.37 MMT.

Informa estimated the world wheat crop at a record 703.5 MMT, broadly similar to yesterday's 702 MMT from the FAO/AMIS and the USDA's 701 MMT. They have the Russian crop at 52 MMT, up 38%, with Ukraine producing 21.4 MMT, up 35%, and Europe seeing production of 138.8 MMT, up 5% on last year.

Good winter rains will boost Morocco's grain crop to 9.7 MMT this year, say the Ministry, an increase of 90% on last year's drought damaged crop. Soft wheat output will rise by a similar percentage to 5.2 MMT, they added. The USDA has them down to import  39% less wheat in 2013/14.

Closer to home, the German Farmers Association (DBV) said that the area of farmland affected by the recent floods there is at least 150,000 hectares, and possibly as much as 250,000 ha. To put that into perspective the German grain area for the 2013 harvest is seen at 6.5 million ha, along with a further 1.4 million going into rapeseed. That puts the cropping area flooded at a maximum of 3% even if we go with the higher estimate and assume that all the land involved was under cultivation with grains/rapeseed and not simply pasture, fruit/vegetables etc.

The HGCA said that we used 505 TMT of wheat for flour, starch and/or bioethanol production in April, of which 62.5% was home grown - the lowest proportion in a single month since 1993/94. Imported wheat usage in the Jul/Apr period was 1.36 MMT, almost double that of a year previously. Apr 1 home grown wheat stocks were down 15% year-on-year, imported stocks were up 62%.

The Farmers Guardian carried a report concerning the ongoing production problems at Vivergo, suggesting that the plant's wheat usage this season might be less than 100 TMT, less than a tenth of their anticipated annual requirement when fully operational.

FranceAgriMer released their weekly planting progress and crop condition report today. Crop development is still lagging for the week through to Monday. They say that 56% of the winter wheat crop is heading, up from 35% last week but well behind 97% this time last year. Winter barley is now 100% headed, spring barley is only 6% versus 52% this week in 2012.

French wheat crop ratings held steady for wheat at 68% good/excellent, and likewise for winter barley at 67%. Spring barley in the top two categories slipped to 73% from 78% a week ago. Corn conditions good/excellent also fell from 67% last week to 62% this time round. Corn plantings didn't move from last week at 89% complete, ten points behind last year.

They've had a better week weather-wise this week, so things may have improved in next week's report.