EU Grains Rise On Black Sea Rains/Snow
03/10/13 -- EU grains closed higher with Nov 13 London wheat settling GBP3.05/tonne firmer at EUR159.65/tonne and Jan 14 up GBP2.90/tonne at GBP161.65/tonne. Nov 13 Paris milling wheat was up EUR2.25/tonne to EUR195.00/tonne whilst Nov 13 Paris rapeseed rose EUR0.50/tonne to EUR368.75/tonne.
The pound was a bit weaker today, aiding London wheat to jump to a near one month high. Paris wheat meanwhile rose to a 2 1/2 month high on strong demand and continued planting problems in Russia and Ukraine. Chicago wheat hitting a 14 week high lent good support.
Winter plantings for the 2014 harvest in Russia are now 50% complete at 8.2 million hectares. That's way below the 12.7 million ha sown this time a year ago and the 11.5 million planted in 2011.
Plantings in Ukraine are also well behind normal, and it's reported to have started snowing there today.
The Russian grain harvest is now 77.9% complete at 78.6 MMT, up less than 4 percentage points in a week as heavy rains continue to disrupt combine activity. The wheat harvest is 80.6% done at 48.7 MMT, the barley crop is 83.1% in at 14.9 MMT and the fledgling corn harvest only 15.4% complete at 1.9 MMT.
This is the news that is sending global wheat prices higher at the moment, spurring funds to cover their extensive short position in Chicago wheat and propelling US prices to a very hefty premium over corn. Is this sustainable? Who can tell.
Reports continue to suggest that early US corn yields are better than expected, and significantly so, and that maybe they will end up with a record crop in excess of 14 billion bushels this year versus only 10.78 billion in 2012.
Whilst US and EU wheat exports have been very good up to now in 2013/14, data from the leading French export hub of Rouen today showed grain exports down 46% versus last week at 142,486 MT. That included soft wheat heading for Mauritania (35 TMT), Algeria (31 TMT) and the UK (6.2 TMT). They also exported 40 TMT of feed barley to Saudi Arabia and 17.9 TMT of malting barley to Peru this week. It remains to be seen if this is just a blip or the start of a trend.
The market is expecting crop data from Stats Canada tomorrow to show record wheat and canola production there this year. The all wheat crop could come in at anywhere up to 34 MMT versus 27.2 MMT last year and the previous record set in 1990 of 32.1 MMT. They are also expecting a canola crop in the region of 16-18 MMT versus 13.87 MMT in 2012.
The FAO estimated the 2013/14 global cereal crop at a record 2.489 billion MT, down 3 MMT from their previous estimate, but up 8% from 2012/13. They have the wheat crop at 704.6 MMT (still a record) versus a previous estimate of 709.8 MMT due to poor South American crops and excessive moisture in Black Sea.
The partial US government shutdown means that we are deprived today of the usual Thursday USDA weekly export sales data. Strong demand for US wheat from Brazil and possibly China too, is what the market thinks is going on under the table. Nobody seems sure when these reports will resume being updated.
