EU Grains Mixed As US Corn Losses Trims Early Gains
02/12/13 -- EU grains closed narrowly mixed, after Paris wheat had earlier raced to fresh 6-month highs. Gains were pared back later in the day though when the Chicago market turned lower on corn, which was then rapidly followed by wheat and soybeans.
The session ended with Jan 14 London wheat down GBP0.25/tonne at GBP164.25/tonne, Jan 14 Paris wheat was EUR0.25/tonne firmer at EUR210.00/tonne, Jan 14 Paris corn was up EUR1.00/tonne at EUR178.75/tonne and Feb 14 Paris rapeseed fellEUR0.50/tonne to EUR377.50/tonne.
Everything was green across the board in early trade, but reports that China had rejected another two cargoes of US corn due to them containing non-approved GMO varieties quickly turned CBOT corn red as it fell to fresh 3 1/2 year lows, and other US markets followed, with that weakness also spilling over in European grains.
The pound hit it's best level against the euro since January, and managed to rise above 1.64 versus the US dollar for the first time since August 2011 - potentially making imports of wheat and corn even cheaper. That also took some of the shine off UK wheat.
It's the same old story for EU wheat. Cheap early season sellers like Romania, Russia and Ukraine now have little left to sell, leaving the door open for premium sellers like France and Germany to mop up demand from buyers North Africa and the Middle East. US wheat is cheaper, but has a hefty freight disadvantage into these homes. India still has plenty of wheat to sell, but not everybody likes their quality.
India's winter wheat planting for next year's short-cycle crop (harvesting begins late March and just about done by the end of April) is in fact now well advanced. The top producing state of Uttar Pradesh has already sown 6.38 million hectares, a 5-year high for this time and 17% more than last year. Nationally, almost 18 million hectares of winter wheat has been sown versus 15.8 million a year ago. An Indian Ministry official forecast production in 2014 at a potential record 95 MMT.
The government are actively seeking to sell wheat prior to the influx of another bumper new crop harvest, with state-owned stocks far outweighing recommended buffer levels. The government support price for 2014 was recently raised again from the level offered last season, to help ensure that growers plant well again. The plan seems to be working. The only problem is that the government now have to sell this wheat at a loss once storage and various other costs are factored in.
Russia exported 2.26 MMT of grain in the Nov 1-27 period, including 1.54 MMT of wheat, 539 TMT of corn and 143 TMT of barley. Year to date exports are up 16% on last year at 13.64 MMT.
Russia's harvest now stands at 95.3 MMT off 95% of the planned area. That includes 54.1 MMT of wheat and 16.3 MMT of barley. Their corn harvest is 80.5% complete, producing a crop of 10.3 MMT to date.
The major Russian port of Novorossiysk on the Black Sea exported 751 TMT of grains in November, 6% less than in October, but 24% up on November 2012. That volume included 462 TMT of wheat (down 32% versus October), 45 TMT of barley (down 53%) and a record 244 TMT of corn. They are currently said to be loading a 47 TMT consignment of corn for Germany - an unusual home for Russian corn - as they look to spread their export wings afield. Clearly they are following Ukraine's lead in producing and exporting much larger volumes of corn than they ever have before.
The Ukraine grain harvest is 98% done at a record 62 MMT, up 36% on a year ago. Corn harvesting is 94% complete, producing a crop of 28.4 MMT so far (also a record). The Ukraine Ministry said that 98% of winter grains have now emerged and 92% of crops are in good/satisfactory condition. There's no sign yet of the current civil unrest in the country causing any disruption to grain supplies, but the situation warrants monitoring.
Protests are beginning to heat back up in Egypt too, which may signal further wheat import tenders.
Spain imported 348 TMT of wheat in September, only half the level shipped in during the same month in 2012. Corn imports were down even more, 87%, to 188 TMT. They had a bumper grain crop this year.
It's looking like Argentine wheat production could have taken another hit this year though, if the Ministry are to be believed. That could limit their export effectiveness again in 2013/14.
There's a blast of Artic air forecast to "sink southward out of Western Canada into the Great Plains and Upper Midwest, causing sub-zero F temperatures Wednesday-Friday nights," according to Martell Crop Projections. Some are talking of this causing potential damage to some recently planted, and unprotected by snow, US winter wheat.
