EU Grains Mostly Lower As US Wheat Trades Close To 19-Month Low
27/12/13 -- EU grains closed mostly lower, pressured by Chicago wheat falling close to the $6/bushel mark for the first time since May 2012 yesterday (the US markets were open on Boxing Day).
Jan 14 London wheat bucked the trend ending GBP0.25/tonne higher at GBP164.00/tonne, although all other months posted losses of between GBP0.15-1.30/tonne. Jan 14 Paris wheat finished EUR2.25/tonne easier at EUR208.75/tonne, Jan 14 Paris corn fell EUR0.25/tonne to EUR172.25/tonne, whilst Feb 14 Paris rapeseed dropped EUR0.75/tonne to EUR367.00/tonne.
The euro jumping to a more than two year higher against the dollar today didn't help Paris grains. Reuters reported that Mar 14 Paris wheat is now priced at the equivalent of a more than $60/tonne premium to the same position in Chicago. Yet the pace of EU wheat exports is higher than it's ever been, with the USDA forecasting that Europe will export a record 25 MMT in 2013/14.
Brussels has already issued export licenses for 13.4 MMT of EU soft wheat, a little less than halfway through the marketing year, although surely that pace will tail off later in the season?
India remain active in trying to shift wheat for Jan/Mar 2014, with a couple of government-backed groups currently tendering to sell 250 TMT. There's also competition from Australian and Canadian wheat following bumper production there this year.
Russia's State Statistics Service (Rosstat) today said that the clean weight grain harvest there this year was 91.3 MMT, up nearly 29% versus last year. That included a record corn harvest of 10.7 MMT in clean weight, up more than 30% on last year. Ukraine has also had a record corn crop in 2013, as too has of course America, and it is these large global corn inventories that is currently weighing on wheat prices.
Meanwhile China is currently rejecting large volumes of US corn, and now DDGS too, if they are found to contain traces of the MIR 162 stain which has been waiting for approval for entry into the country for more than two years. The Chinese government don't appear to be in a huge hurry to address the problem, having recently brought in a record corn crop of their own in 2014.
On the international tender front, Bangladesh's state grains buyer reissued a tender to buy 50 TMT of wheat yesterday. Jordan is also re-tendering for 100 TMT of wheat and Qatar are in the market for 84 TMT of optional origin feed barley. Morocco's state grain buyer is tendering for 180 TMT of wheat, but seeking to purchase it on the local market.
There's talk of an "Arctic blast" hitting the US Midwest next week, but perhaps not really penetrating into the main winter wheat growing areas. There's also talk of lack of snow cover possibly being a problem for Russian winter wheat in some areas if and when a hard freeze arrives there, although crop conditions are currently said to be good.
Europe's winter wheat crop is also generally in good shape, with production in 2014 expected to be up around 2%, led by a rebound in output in the west, including of course here in the UK.
