EU Wheat Performing Better Than US Counterpart

20/12/13 -- EU grains closed mixed, in a continuation of the overall sideways pattern remains. That's more than can be said for US wheat, which seems to be stuck in terminal decline, despite a modest attempt to stage an end of week rally today. As of last night's closes Chicago wheat had fallen 6.8% so far this month, with Minneapolis wheat down 5.9%. In contrast, both Paris and London wheat are actually marginally higher.

Today's session ended with Jan 14 London wheat down GBP0.80/tonne at GBP164.70/tonne (correcting last night's close which was a bit false), whilst Mar 14 rose GBP0.50/tonne to GBP164.50/tonne. Jan 14 Paris milling wheat closed EUR2.25/tonne higher at EUR210.75/tonne, Feb 14 Paris rapeseed rose EUR1.00/tonne to EUR368.50/tonne, whilst Jan 14 Paris corn was down EUR0.50/tonne to EUR173.25/tonne.

For the week that puts front month London wheat GBP0.70/tonne lower, with Paris wheat EUR2.25/tonne firmer, Paris rapeseed up EUR1.25/tonne and Paris corn down EUR2.50/tonne.

Strong demand is what has been supporting European wheat. Brussels issued 818,455 MT of soft wheat export licences this past week, the second highest weekly total of the season so far. Cumulative EU-28 wheat exports now stand at 13.4 MMT versus 9.1 MMT a year ago, an increase of more than 47%.

Lack of demand is being cited as negative for US wheat, although a glance at the same statistics across the pond reveals that the US has exported 18.3 MMT of wheat so far this season, an increase of almost 39% on only 13.2 MMT this time last year.

There's not really that much difference there at the end of the day is there? Maybe the demise of Chicago wheat to 18-month lows, and what Reuters say will potentially be its biggest three-week loss in two years, owes much of its current misfortune to increased fund selling? This has really gathered momentum over the last 3-4 weeks, and last Friday's Commitment of Traders data shows them now sitting on the largest short position in CBOT wheat that they've had in at least the last 12 months.

In fundamental news, Europe's 2014 wheat crop is in generally good shape, plantings are up a little, and early forecasts are for a small rise in output next year in the region of 2%. Plantings and production in America are estimated likely to be up more than that, with Informa earlier this week suggesting that all wheat output in the US could by up by almost 10% in 2014.

The German Stats Office today said that winter wheat plantings there were up 2.5% to 3.13 million hectares, which is broadly in line with Toepfer's estimate of a rise of 3% to 3.22 million ha from earlier in the week. The Stats Office peg German barley plantings 2.7% higher at 1.24 million ha, with the OSR area falling 1.8% to 1.43 million ha.

Ukraine said that it had now harvested more than 30 MMT of corn this year (easily a record volume), taking the 2014 grain harvest to 63.664 MMT - also a record.

A wet autumn in the FSU means that winter grain plantings there are down, although plentiful soil moisture has helped crop conditions.

The Ukraine Stats Office said that winter grains had been planted on 7.79 million hectares this year, a decline of 4% versus last year. Winter OSR has been planted on 953k ha, a drop of 7.6% versus 12 months ago. The Ministry say that 92% of winter crops are in good/satisfactory condition.

Russian winter grain plantings meanwhile have only been achieved on around 93% of the area sown in 2012. Both countries are likely to plant significantly more corn in the spring on the extra land available, potentially beating this year's record FSU crop again in 2014.

Russia said that it exported a record 589 TMT of corn last month, up 128% versus Nov 2012 and up 143% on the volume exported in October.