EU Wheat Mixed In Quiet Trade, Egypt Buy Supports
06/01/14 -- It was a predictably slow start to the first full week of the new year, with EU grains closing mixed, although mostly a little higher following the US lead.
Jan 14 London wheat finished the day down GBP0.45/tonne at GBP160.50/tonne - the lowest for a front month since early October. New crop Now 14 London wheat ended GBP0.30/tonne firmer at GBP150.10/tonne, recovering some ground from a finish within GBP0.10/tonne of the lifetime contract closing low on Friday.
Jan 14 Paris wheat finished EUR0.75/tonne firmer at EUR208.75/tonne, Jan 14 Paris corn was also up EUR0.75/tonne at EUR173.25/tonne, whilst Feb 14 Paris rapeseed too rose EUR0.75/tonne to EUR367.25/tonne.
Fresh news was relatively thin on the ground to get what was for many the first proper day's trading of 2014 underway, but the spillover news from late Friday that Egypt had made their largest single wheat purchase since 2010, and that Algeria too had been in the market for a significant volume, added a bit of underlying support early on.
US wheat futures rose on winterkill fears, as Bloomberg reported that the current cold snap saw Midwest temperatures drop to zero F over the weekend (minus 18 C), although most analysts maintain that the bulk of the US winter wheat area has a protective snow covering to help keep possible losses to a minimum.
Other left-over news from Friday night included reports that Informa Inc had forecast the EU-28 2014/15 all wheat crop at 143.1 MMT, up from a previous estimate of 140.4 MMT, but still below Strategie Grains' recent estimate of 145.7 MMT.
Following Friday's 535 TMT purchase, Egypt said that it now has enough wheat bought to last it until Apr 23. Sources suggest that their under-pressure government wish to return to the norm of the old days and have six months worth of wheat in reserve, which indicates that they may be in the market for more wheat again soon. Their own harvest usually begins in April.
India's Ministry said that the country's farmers had planted a record 30.2 million hectares of wheat, up 2% on last year and beating the previous record 29.9 million sown in 2011/12. The government there have set the price that they will pay growers in 2014 quite high, to encourage more plantings and improve profitability with an election coming up.
India remain keen sellers of wheat for Jan/Mar shipment ahead of their 2014 harvest which usually begins in the second half of March. Oman are tendering for 40 TMT of Indian wheat for Jan 20-Feb 20 shipment.
"Unseasonable warmth extends into Ukraine and European Russia where one of the mildest winters in years (so far) has unfolded. Though temperatures are well above normal, 5-9 F above average, it is still not cold enough to stimulate wheat growth. For example, Ukraine maximum temperatures have reached the mid 30s F in recent days and upper 20s F at night," said Martell Crop Projections.
South America weather developments warrant monitoring though, particularly in Argentina where the forecast is drier and hotter than normal (expecting daytime highs of 95-100 F) across the next 15 days, with some corn there entering the key pollination phase. Brazil is seen wet in the south, but dry elsewhere and with average temperatures generally normal for the time of year.
Revised crop production estimates are due out from Brazil's CONAB this week, before the USDA give us their version of events late on Friday, London time. Fund re-balancing of their positions (which may support US wheat and corn) is said to be likely to start on Wednesday and last for 5 days.
