London Wheat Hits 15 Month Low As Black Sea Harvest Looms

Posted by Nogger - a legend in his own mind at 19:57 | Categorized as

11/06/13 -- EU grains slumped to fresh lows pressured by the impending Black Sea harvest which is now just days away. Paris wheat at least managed to close with a few modest gains at the finish, but it was a different story for London wheat. Ukraine could be harvesting in the drier areas in the south and east within 7-10 days, 2-3 weeks earlier than normal, it is thought.

Jul 13 London wheat finished the day GBP1.25/tonne lower at GBP170.25/tonne, and with Nov 13 ending GBP0.25/tonne down at GBP172.75/tonne. Nov 13 Paris wheat settled EUR0.25/tonne easier at EUR201.75/tonne. Jul 13 London wheat traded below GBP170.00/tonne at one point - a near 15 month low for a front month.

The Ukraine Ministry estimate the wheat crop there at 20 MMT, up 27% on last year. Current new crop offers FOB the Black Sea are said to be around USD250/tonne for Ukraine feed wheat (close to GBP160/tonne) and USD255/tonne for milling wheat (circa GBP164/tonne). Those levels are well under European or US offers, with the latter quoted at around USD282/tonne FOB. Russian new crop milling wheat is also quoted at significantly cheaper prices than those in the West.

The Russian Ministry said that spring grain plantings are just about wrapped up at 99.8% complete on 30.2 million hectares. The corn planted area has exceeded expectations at 2.3 million ha, they added. That's a bit more than the USDA's 2.15 million ha prediction. The Ministry plan to buy around 5 MMT of mostly wheat to replenish their depleted intervention stocks in 2013/14, but may not begin buying until October or November they said, presumably hoping for a bit of harvest pressure to cause prices to drop a bit further yet.

The Russians sold 77,479 MT of intervention grains in a tender offering of 89,899 MT yesterday. That takes the total volume sold so far since sales began to just over 3.5 MMT.

Tunisia issued a tender for 75 TMT of soft milling wheat for July/August shipment. They bought a similar volume of optional origin feed barley yesterday. Qatar bought 40 TMT of optional origin, but thought to be Black Sea wheat, yesterday.

Japan said that they were extending their current "ban" on importing US wheat to include everything but SRW wheat, and only then if that's shipped from the Gulf and not the Pacific North West, following the recent discovery of GMO wheat growing in Oregon. Taiwan says US wheat imports are "under review" and South Korea has already temporarily suspended them pending the outcome of an investigation into how the wheat was found to be growing in the US 8 years after trials on the strain were suspended.

Informa estimated the 2013/14 world rapeseed crop at a record 65.2 MMT, up 4.5% on last year and almost 3 MMT more than the USDA forecast. They have production in the EU at 20 MMT, the same as the USDA and up 4.7% on last year. The Canadian crop is seen up 15% on last year to 15.3 MMT, which is 0.8 MMT higher than the USDA predict.

The French Farm Ministry pegged the 2013 winter rapeseed crop at 4.5 MMT, down 17% on last year. The crop there has been afflicted by similar problems to that in the UK.

All eyes are now on the USDA for tomorrow's June World Supply and Demand numbers. No huge changes are expected for wheat. The trade is expecting not much alteration to 2012/13 global wheat ending stocks, pegged at just over 180 MMT last month. The 2013/14 carryout is seen down a little from 186.4 MMT in May to around 185.1 MMT this time round.