EU Wheat Falls, Pressured By Low Corn Prices

29/10/13 -- EU grains closed mostly lower as US corn hit fresh more than 3-year lows and benign weather in the Black Sea aids late harvesting and winter grain plantings.

Nov 13 London wheat closed down GBP0.50/tonne at GBP164.50/tonne, Nov 13 Paris wheat ended EUR0.50/tonne lower at EUR202.00/tonne and Nov 13 Paris rapeseed was EUR2.75/tonne weaker at EUR362.50/tonne.

Wheat continues to attempt to punch above it's weight, but it is getting increasingly difficult with corn offered at such substantial discounts on both sides of the pond. French wheat is currently priced around 17% above that of corn, and in the case of Chicago wheat the premium is almost 59%!

Russian and Ukraine winter wheat plantings are much better than was expected a few weeks ago. Meanwhile much warmer than normal and drier weather conditions in the Black Sea mean that corn harvesting has picked up considerably and that production in both Russia and Ukraine looks like being at record levels this year.

The EU Commission forecast soft wheat production here at 133.5 MMT, up 2 MMT on their previous estimate and 6.4% more than last year. They have EU-28 corn output at 65.9 MMT, up 12.6% on 2012 and the EU-28 barley crop at 59.2 MMT, a rise of 8% versus 2012.

The market has turned bearish again, with the January MATIF contract edging down to EUR200/tonne with some traders suggesting a move to EUR195-197/tonne is attainable. That could drag London wheat back to test the GBP160/tonne support level.

As of October 29, Ukraine has now planted winter grains throughout an area of 7.515 million ha, or 92% of the original plan, say the local Ministry. That's much more than was expected a couple of weeks ago.

The Ukraine 2013 grain harvest now stands at 51.246 MMT, off 88% of the planned area. Corn accounts for 17.89 MMT of that off 62% of the combinable crop area, they added.

The Russian grain harvest meanwhile is 92% complete, producing a crop of 90.3 MMT to date. Wheat accounts for 53.5 MMT of the harvest total off 95.7% of the planned area (versus 39.6 MMT a year ago at this time), yields are up almost 26% at 2.33 MT/ha.

Russian winter grain plantings are almost 85% done at 13.9 million hectares.

Bangladesh have reissued a tender to buy 50 TMT of optional origin wheat for Nov-Dec shipment.