Paris Wheat Closes At Best Levels Since May
29/11/13 -- EU grains closed mostly higher with Jan 14 London wheat ending up GBP0.25/tonne at GBP164.50/tonne and Jan 14 Paris milling wheat settling EUR1.00/tonne firmer to close at EUR209.75/tonne. Feb 14 Paris rapeseed fell EUR1.00/tonne to EUR378.00/tonne, whilst Jan 14 Paris corn closed EUR1.25/tonne higher at EUR177.75/tonne.
There were mostly modest gains for the week overall, London wheat added just GBP0.25/tonne, Paris rapeseed was unchanged, Paris corn nudged EUR1.25/tonne firmer whilst Paris wheat gained EUR3.25/tonne. Even this relatively modest gain was enough to make this the highest close on a front month for Paris wheat since May.
That rise has been a gradual claw higher, rather than a meteoric rise however as Paris wheat continues to garner support from strong export demand - Brussels issued a further 577 TMT of soft wheat export licenses this week. That takes the total volume granted so far to 11.2 MMT, more than 50% higher than in the same period 12 months ago. Success in this week's Egyptian wheat tender is also friendly, even if they did only buy one cargo.
US wheat was offered at a substantial discount to French origin however, but missed out due to freight. Romanian wheat was also cheaper (although only one cargo was offered, indicating that supplies are running low after their early season aggression) but the Egyptians said that this consignment didn't meet the tender terms.
Traders are already starting to look at crop prospects for 2014, with SovEcon this week forecasting a Russian grain crop of around 86-90 MMT in clean weight versus their estimate for this year of 89.5 MMT. They estimate this year's Russian wheat crop at 51.1 MMT after cleaning and drying, suggesting that output next year may fall by 3-4 MMT due to lower winter wheat plantings.
Lanworth are a bit more optimistic over the prospects for Russian wheat in 2014, forecasting the crop similar to this year at 51.7 MMT. With winter grains planting only completed on less than 90% of the originally intended target, that may be a tall order. Lanworth see Ukraine's wheat output up by around 1 MMT to 23 MMT next year, again that could be aiming a bit on the high side given that winter plantings are also down here. Spring acreage faces competition from corn, barley, sunflower, rapeseed and even the rapidly expanding FSU soybean crop.
Things look better closer to home. Strategie Grains recently forecast the EU-28 soft wheat planted area rising 4% from 23.2 million hectares to almost 24 million, with production seen increasing 5 MMT to 140 MMT - the highest since 2008 and the second largest on record.
Wheat production prospects across the pond are also bright, with the US crop heading into dormancy rated 62% good/excellent, far better than only 33% a year ago. Lanworth estimate production there to climb 8.6% to 63 MMT for the 2014/15 campaign.
Wet weather in France is slowing both the corn harvest and winter wheat plantings. The former only moved from 67% complete to 73% done in the past week, according to FranceAgriMer. The corn harvest was almost over at 98% done this time a year ago. Meanwhile winter wheat plantings are only 91% complete versus 88% the previous week and 95% this time last year.
As ever then it would seem that prospects look good - great even - in some places, and not so rosy in others, but there's a long way to go yet of course. There's also a record world corn crop weighing on the market this season, and a large price disparity between the two grains. That's capping demand for wheat, and is already discouraging corn plantings in South America. Will the same be replicated in Europe, the FSU and even the US next spring?
