EU Wheat Falls Further, Big Crops Forecast

05/08/13 -- EU grains closed lower to start the week on harvest pressure and the outlook for big crops in many places around the globe.

On the day both Nov 13 and Jan 14 London wheat closed GBP3.20/tonne lower, with front month Nov 13 slipping under GBP160/tonne to close at GBP159.50/tonne. Nov 13 Paris wheat settled EUR2.50/tonne lower at EUR184.00/tonne.

The Russian grain harvest will total 86 MMT, including 51 MMT of wheat, according to SovEcon. APK Inform say that Russia will harvest 52.1 MMT of wheat this year, an increase of 38.1% compared with last year.

Grain harvesting so far stands at 37.6 MMT, including 29.7 MMT of wheat. Yields on wheat currently average 3.07 MT/ha versus 2.37 MT/ha this time a year ago.

Russia exported over 2.4 MMT of grains in July (including 1.9 MMT of wheat), according to customs data, up versus just over 2.0 MMT in July 2012.

Ukraine's early grains harvest meanwhile is winding down, with 29 MMT already in the barn.

The prospect of a record US 2013 corn crop grows ever nearer, and it is expected to be a record by some considerable distance, with some estimates coming in now well in excess of 14 billion bushels.

CBOT Dec 13 wheat fell to contract lows on ideas that a USD2.00/bushel premium to corn is simply too much and will sap demand for wheat. Although corn has been a premium to wheat at some points during the last 6 months, due to last year's sharp drop in US corn production, a USD1.00-1.50/bushel premium could perhaps be considered "normal".

It took a major supply scare in corn last year to push it to parity or even a small premium to wheat, it looks like wheat needs some kind of similar storyline if it is going to hold onto a USD2+ premium to corn. At the moment it hasn't got one.