EU Wheat Down Again, Nov 13 London Wheat Sinks To One Year Low

Posted by Nogger - a legend in his own mind at 05:52 | Categorized as

07/08/13 -- EU grains closed mostly a little easier once more, with Nov 13 London wheat slipping further below the GBP160/tonne mark to a one year low.

Nov 13 London wheat ended the day GBP1.55/tonne lower at GBP157.75/tonne and with Jan 14 also closing down GBP1.55/tonne at GBP158.75/tonne. Nov 13 Paris wheat fell EUR1.00/tonne to close at EUR183.25/tonne.

Fresh news was relatively thin on the ground, but the path of least resistance continues to be downwards. That's sadly true here in the UK too, even with the anticipated sharp drop in wheat production here for a second year in a row.

The "big picture" shows strong growth in production in most of the leading exporting nations around the world, with the exception of the US. This growth is led by the Eastern European and Black Sea nations, who unfortunately are frequently discount sellers, highlighted by the success once again of Ukraine and Romania in this week's Egyptian tender.

A Reuters survey of analysts yesterday estimated the Russian, Ukraine, and Kazakhstan total 2013/14 wheat crop at 87.0 MMT, up 36% from last year.

It's not just there where big leaps in wheat output are expected in 2013/14 however. ANZ Banking Group today estimated Australia’s 2013/14 wheat crop at 26.5 MMT, versus the current USDA estimate of 25.5 MMT and up 20% on the 2012/13 crop of 22.0 MMT.

Canada meanwhile are expecting their largest wheat crop since 1991 at 29.8 MMT, according to a recent estimate from Lanworth Inc. Argentina's 2013/14 wheat output could rise 30%, say the USDA.

Closer to home the German barley and rapeseed harvests are drawing to a close, according to the German Farmers Union (DBV), who say that the barley crop will come in at 7.8 MMT and rapeseed output up over 14% at 5.5 MMT. Other trade estimates put the German rapeseed crop even higher, in the 5.75-6.00 MMT region. The German winter wheat harvest is under way, but in a relatively early stage. DBV didn't put a production estimate on that. The USDA forecast a 6% rise in wheat output to 23.7 MMT.

Hungary's 2013/14 wheat crop is expected to total 5.1 MMT, up 27.5% versus last season, say the Ag Ministry.

The pound rose to a 6 week high versus the US dollar, further depressing London wheat, despite a Reuters report suggesting that the general trade guess for the UK wheat crop this year is around 12 MMT, a drop of 10% on last year's disappointing 13.3 MMT output. At least hopes are fairly high that quality should be better than last year.