EU Wheat Falls As Chicago Prices Hit Fresh 3 1/2 Year Lows

17/01/14 -- EU grains finished mostly lower, with wheat under pressure as prices in Chicago fell to fresh 3 1/2 year lows.

Jan 14 London wheat finished the day down GBP1.45/tonne at GBP152.85/tonne, whilst new crop Now 14 London wheat ended GBP1.75/tonne lower at GBP144.75/tonne - a new lifetime closing low for the contract.

Mar 14 Paris wheat was EUR0.75/tonne easier at EUR191.75/tonne, Mar 14 corn was down EUR0.25/tonne to EUR172.50/tonne, whilst Feb 14 Paris rapeseed closed EUR0.25/tonne higher at EUR360.50/tonne.

For the week that puts front month London wheat down GBP1.65/tonne, with Paris wheat slipping EUR1.25/tonne, Paris corn gaining EUR1.00/tonne and Paris rapeseed adding EUR4.25/tonne.

Yesterday's Egyptian wheat purchase maybe proved a couple of things. Firstly, French wheat offers needed to be trimmed to compete, having missed out in the previous tender the results of which were announced on Monday. And trimmed they were, to the tune of $6/tonne in only a few days.

Secondly, it appeared to prove that there is still also wheat left for sale in Ukraine, Russia and Romania at competitive prices - albeit only after factoring in a freight advantage.

Indian wheat is not approved for import into Egypt, so they continue to scout the market elsewhere for interest too. Another government backed firm, MMTC, today offered 120 TMT of Indian wheat for tender for Feb/Mar shipment.

There's talk of a decision being due soon on whether or not the Indian government will approve the release of more wheat onto the global market, in addition to the 2 MMT said to be already earmarked for sale in Q1 of 2014, ahead of a potential bin-busting 100 MMT plus crop of their own. Harvesting of that starts in March.

The Indians have been picking up bids around the $275-280/tonne mark, but are said to be prepared to take down to $260/tonne if market conditions dictate it. That's around $20/tonne below the winning French bids in yesterday's Egyptian tender.

Some Asian, African and Middle Eastern destinations are of course less particular about who's wheat they buy than Egypt.

EU-28 wheat exports are on track to be record large in 2013/14, although demand for wheat from the feed sector here is being hit by cheap corn imports which are also flooding in from the likes of Ukraine. There's also the large domestic barley crop to contend with.

Winter wheat crop conditions in Europe and the FSU generally look good. Although a lack of snow cover remains a legitimate concern for some, there's no damage being reported yet.