EU Grains Mostly Firmer, But Sluggish US Markets Weigh

20/02/13 -– EU grains closed mostly firmer, although another sluggish performance by Chicago wheat and corn kept a lid on potential price rises. America finally do seem to be picking up some volume wheat business, which will make this week's weekly export sales report of interest. European sales meanwhile have displayed no sign of letting up at all this far, so perhaps understandably there was no EU wheat offered in the latest Egyptian tender.

The EU markets closed the day with Mar 13 London wheat up GBP0.75/tonne to GBP205.75/tonne, benchmark May 13 also GBP0.75/tonne firmer to GBP207.75/tonne and new crop Nov 13 GBP1.15/tonne higher at GBP188.15/tonne. Mar 13 Paris wheat declined EUR1.25/tonne to EUR243.75/tonne.

The pound fell off a cliff following the release minutes of the BOE's MPC meeting this month which showed a 6-3 vote against more quantitative easing this month, with Bank governor Sir Mervyn King being among those in favour of more action. That added support to London wheat as sterling slumped to it's lowest level since Oct 2011 against the euro and since Jun 2012 versus the dollar, making imports more expensive.

Talking of imports, customs data released today shows that the UK shipped in more wheat in December (up 225% on Dec 2011 at 305,584 MT) than in any previous month on records dating back to July 1992, according to the HGCA. Halfway through the 2012/13 marketing year that places total wheat imports at 1.34 MMT, almost three times the volume imported during the same period the previous season.

UK December wheat exports meanwhile were down 89% year-on-year to just 35,130 MT.

Egypt bought only one cargo of US wheat in it's latest tender. Booking 60 TMT of US SRW wheat at USD296.75/tonne FOB the Mississippi River, plus USD28.85/tonne freight, for Apr 10-20 shipment. There were no other origins offered. The Egyptian Ministry said that they have enough wheat in reserve to last them until late June. There are some questioning how long they can continue to stump up the USD5.5 billion that the country spends on state food subsidies every year, given the ongoing political turmoil and currency devaluation in Egypt.

The lowest offer in a Bangladeshi tender to import 50 TMT of wheat in Mar/Apr was apparently USD328.16 including freight.

China is now very strongly rumoured to have bought 400 TMT of Australian wheat, along with 100 TMT from Canada on top of the suggested 350 TMT that they've already purchased from the US in recent days, according to a report on Reuters. The bulk, if not all, of this wheat is said to be for Apr/first half May shipment. The quality of last season's crop was generally poor, and it looks like they need to buy in some better grade wheat ahead of new crop harvesting which takes place May/Jun.

Russia sold a further 62,439 MT of it's intervention grain stocks, bringing the total volume of sales so far to 1.94 MMT. The Russian Grain Union said that the country may harvest 90 MMT of grains this year and export 20 MMT in the 2013/14 marketing year that begins in July. Exports in the current season are currently around 13.7 MMT and expected to be in the region of 14.5 MMT at the end of June.

US winter wheat on the Great Plains is in with another shot of some much needed moisture relief this week. This current radar shows light snowfall in areas of southwest KS whilst rainfall is covering nearly all of the state of OK. This isn't quite a drought-buster just yet though. The NOAA precipitation outlooks have "normal" precipitation expected for most of the western plains with the exception of "below normal" for western KS and OK. The 8-14 day map shows "below normal" precipitation for the entire western plains.

RMI Analytics say that malting barley production in Europe this year could fall 13% to 8.8 MMT as farmers plant less of the grain due the the historically low premium over feed barley, says a report on Bloomberg today.

Malting barley was one of the worst performers in the grains sector in 2012, with prices falling almost 5% year-on-year, whereas London feed wheat prices rose by almost 35% and Paris milling wheat futures by nearly 24% during the same period.