EU Wheat Claws Higher Despite Record Canadian Production
04/12/13 -- EU grains closed mostly higher with Jan 14 London wheat ending up GBP0.95/tonne at GBP165.20/tonne and Jan 14 Paris milling wheat settling EUR1.50/tonne firmer to close at EUR213.00/tonne. Feb 14 Paris rapeseed rose EUR0.75/tonne to EUR378.25/tonne, whilst Jan 14 Paris corn closed EUR0.50/tonne higher at EUR182.00/tonne.
Whilst Paris milling wheat may be clawing it's way gradually higher, front month London wheat hasn't closed outside the GBP163-166/tonne range since Oct 18.
To close higher at all was impressive, considering that Stats Canada came out with an all wheat production estimate there of 37.5 MMT this year. That is a record volume by some considerable distance, way above the 33 MMT forecast in October and also much higher than the range of trade estimates of 33.3-35.3 MMT.
They also reported a 2013/14 Canadian barley crop of 10.24 MMT versus trade expectations of around 9.4-9.5 MMT and the 8 MMT estimated in October.
The news comes hot on the heels of a surprisingly large forecast for Australian wheat production yesterday from ABARES. US wheat futures fell a little, but not a great deal in the wake of the Canadian news. A wheat market that doesn't move down, or not by much, in the face of such overtly bearish news is interesting.
There's trade talk of possible damage to US winter wheat is keeping US price losses to a minimum. "The coldest winter temperatures in several years are predicted in the United States expected to last for at least a week. Arctic air sinking into the US heartland will drop temperatures into the single digits F in Kansas and -10 on Colorado feed lots," said Martell Crop Projections. Some traders see maybe 5% of the winter wheat crop as being vulnerable to winterkill this week.
Robust EU exports also underpin the market. FranceAgriMer said that Q1 soft wheat exports (Jul/Sep) were 4.2 MMT, up from 3.2 MMT in 2012/13. Barley exports also rose from 1.4 MMT to 1.8 MMT. French commercial wheat stocks as of Nov 1 were 12.1 MMT, some 1 MMT down on a year previously despite a rise in output this year. Commercial barley stocks were also down, by 1.4 MMT to 4.0 MMT, they said.
A large/close to record fund short position in US wheat and corn futures heading into the year end is seen as supportive to the market in the near term, They are expected to close out some of these positions for profit-taking and book squaring purposes over the next few weeks, leading to increased buying regardless of the fundamentals.
Russia bought 19,169 MT of intervention grains today in their twice weekly purchase. The total volume bought to date this season is only 443 TMT out of their originally declared intention to buy 2-3 MMT by the end of the calendar year. They will do well to buy that volume before the end of the season at this rate.
The Russian harvest may now exceed the Ministry forecast of 90 MMT in clean weight, their head said today. They've currently harvested a grain crop of 95.3 MMT off 95% of the planned area. Wheat accounts for 54.1 MMT of that total.
Ukraine's harvest is 99% complete at a record 62.8 MMT, versus only 46.2 MMT a year ago.
Tunisia bought 100 TMT of wheat and 75 TMT of barley for Jan/Feb shipment, both of optional origin. Algeria purchased 100 TMT of wheat for Jan shipment. French wheat is thought likely to supply both countries.
