Is There A Bit Of Light At The End Of The Wheat Tunnel?

23/01/14 -- EU grains were mostly a bit firmer. Wheat gained support from strong underlying demand.

Jan 14 London wheat went off the board with a whimper, unchanged and untraded at GBP150.50/tonne, whilst new crop Nov 14 was also flat at GBP143.75/tonne. Other months were up to GBP0.50/tonne higher. Mar 14 Paris wheat rose EUR0.75/tonne to EUR193.75/tonne, Mar 14 Paris corn was up EUR1.25/tonne at EUR173.75/tonne and Feb 14 Paris rapeseed was EUR1.50/tonne higher at EUR358.50/tonne.

Very strong demand for wheat is coming to the fore with prices at, or near, multi-year lows.

Algeria bought around 500 TMT of wheat yesterday, Egypt has already been a big volume buyer this month, and Saudi Arabia today entered the fray, with it's first public wheat tender since early November.

They are in the market for 660 TMT, comprising 550 TMT of hard wheat and 110 TMT of soft wheat for April/June shipment.

Iraq bought 350 TMT of hard wheat from Australia, Canada and the US yesterday too. Meanwhile China are said to be actively shopping for around 200 TMT of Australian and/or US wheat.

Brussels announced that they'd issued 819 TMT of soft wheat export licences this past week - the second largest weekly total of the season so far. That takes the total volume granted for export so far in 2013/14 to an impressive 16.7 MMT. That's almost 6 MMT, or more than 50%, ahead of where we were a year ago at this time.

The USDA's current forecast for the season is for the EU-28 to export only 15% more wheat in 2013/14 than in 2012/13.

Persistent wetness remains an issue in some parts of the UK, France and Italy. There's also some talk of winterkill potential in Russia and Ukraine as well as the US.

Whilst it's probably unlikely that losses will be serious, there's maybe enough uncertainty to encourage a bit of short-covering.