It Turns Out That The Argentine Wheat News Wasn't Real - EU Wheat Ends Mostly Lower

21/10/13 -- EU grains closed mixed, but mostly mostly lower to start the week, after the Under Secretary at the Argentine Ag Ministry was revealed to have said that last Thursday night's (generally released Friday morning in Europe) surprisingly low estimate for a wheat crop there this year of only 8.8 MMT was an "honest mistake" and that errors had been made in compiling the data. He didn't give a revised forecast, but said that the next one would be higher. We don't know when that will be, the next scheduled date for a crop report from the Arg Ministry is not until Nov 21.

As this now erroneous news was what propelled the market to 3/4/5 month highs, depending on whether you are looking at London, Paris or Chicago wheat, it should only to be expected that things would move lower in light of today's revelation. Most of Friday's gains remained entact at the finish however. EU markets closed with Nov 13 London wheat settling GBP1.10/tonne weaker at EUR165.50/tonne, whilst Nov 13 Paris milling wheat was EUR0.25/tonne higher at EU204.75/tonne, whilst Nov 13 Paris rapeseed rose EUR2.25/tonne to EUR380.25/tonne however.

With US corn prices recently setting more than 3-year lows, growers in the States will already have one eye on weighing up their options with regards to plantings for the 2014 harvest. The most obvious is a switch to soybeans from corn, but also one to wheat. Informa Economics forecast on Friday that US farmers will plant 1.6 million acres more wheat for the 2014 harvest than they did this for season. They will also plant a lot more soybeans too, as they cut their corn area by 5.7 million from the current USDA estimate (although that may ultimately be reduced a little in next month's WASDE report).

Plantings for 2014 are also what is on traders' and growers' minds elsewhere. For winter wheat, these are well ahead of last year both in France and at home here in the UK, where crop conditions also look much better than they did 12 months ago. It's thought possible that the UK could plant a record winter wheat area this year. The current price differential with barley will certainly encourage doing so.

In Ukraine, the Ministry say that grain plantings for 2014 now stand at just over 7 million hectares, or 86% of the originally planned area. Wheat accounts for 5.9 million ha of that (88% of the intended 6.7 million ha), along with 915k ha of winter barley (77% of plan). Ukraine had planted 7.73 million ha of winter grains this time last year, including over 6.5 million ha of wheat.

In Russia, winter grains are said to have now been planted on an area of 12.5 million hectares, 76.3% of the original target, versus 15.1 million ha this time a year ago.

Whilst both those two sets of planting figures lag last year, they are much better than the "drastic" area cuts that the market was fearing was likely a few weeks ago, which was the catalyst to send the wheat market sharply higher.

Meanwhile, Russia's grain exports are slowing, whilst Ukraine's are speeding up. Russia shipped 1.07 MMT of grains in the Oct 1-16 period, including 832 TMT of wheat, taking their 2013/14 marketing year to date total to 9.97 MMT, a rise of only 7% on last year. SovEcon estimated Russia’s October grain exports at 2.6-2.7 MMT versus 2.93 MMT in September. They will need to get a move on to even hit that reduced target.

Ukraine meanwhile exported 990 TMT last week alone, up 71% on the previous week. That included 680 TMT of wheat (up 63%) and 354 TMT of corn (up 133%). Ukraine's corn exports are expected to continue to gain on those of wheat now that the harvest is in full swing.

Ukraine wheat was said to be the lowest bid in the Iraqi tender this morning.

China's wheat imports appear to be picking up, as expected. They shipped in 718.5 TMT of wheat in September, a 37% increase on the same month in 2012, with 95% of that total coming from the US. Even so, their Jan/Sep calendar year to date imports still lag 2012's by 12% at 2.842 MMT.

They also imported 232.8 TMT of rapeseed in September, a 26% rise on Sep 2012. That takes their 2013 calendar year to date imports to 2.523 MMT, a 24% rise on the same period in 2012.

The USDA will report on US crop progress for the first time this month later tonight. Around half an inch of rain fell over the weekend in parts of Kansas and Oklahoma, the two largest US winter wheat states, where crops are looking much better than in recent years. "Much above normal rainfall has developed in Kansas, promoting very favourable planting conditions. Indeed the US leading winter wheat state is experiencing the best field moisture in several years," said Martell Crop Projections.