EU Wheat Slump Continues

20/12/12 –- EU grains were down again, extending recent losses, with Jan 12 London wheat ending GBP5.00/tonne lower to GBP207.00/tonne, with benchmark May 13 falling GBP4.75/tonne to GBP211.00/tonne and new crop Nov 13 GBP3.00/tonne easier at GBP185.00/tonne. Jan 13 Paris wheat fell EUR5.75/tonne to EUR249.00/tonne.

A sharp year-end related sell-off in Chicago grains also has the European market backpedalling as we head towards the end of 2012. US corn and wheat futures both slumped to fresh 5-month lows today as fund money continues to exit the grains.

These recent developments appear to have little to do with market fundamentals however.

Brussels had another busy week, issuing 537 TMT of soft wheat export licences to bring the marketing year to date total to 9.12 MMT, a very impressive 28% up on year ago levels. At the start of November, when Russia and Ukraine were still active in the market, exports were only 6% up on last season, so the incredibly rapid rate of acceleration in shipments is there for all to see.

German customs data out today shows that they exported 899 TMT of wheat in October, a 55% increase on September's shipments and a massive 165% more than a year previously. Cumulative exports for the 2012/13 marketing year are now 2.2 MMT, up more than 26% on a year ago. Based on the information coming out of Brussels these percentage increases are probably even larger now.

Heavy rains across the UK and France are allowing wetness concerns to redevelop, say MDA CropCast. They forecast the EU-27 2013/14 wheat crop at 132 MMT, only a relatively modest 4% increase on this year's crop, and substantially less than Copa Cogenca's estimate of 138.3 MMT released earlier in the week.

The German Statistical Office say that winter wheat plantings there are 7% up on last year at 3.1 million hectares, with barley plantings up 11% and OSR sowings 10% higher. It is of course a very long time before these crops are in the barn however.

The Ukraine Ministry are said to have authorised the release of a further 300 TMT of wheat for export, which should take their net total to around 6 MMT this season with 5.7 MMT already shipped. There's a possibility that they may review the situation in the spring and allow a little bit more to be exported depending on how crops that are in the ground now survive the winter.

There are reports that bitterly cold temperatures in parts of Russia may be causing some winterkill on crops unprotected by a decent covering of snow.

Winter wheat's chances of some much-needed moisture on the parched US Plains seem to be improving. "A band of heavy snow developed from northeastern Colorado to southern Wisconsin overnight. Snowfall in northern Kansas and southern Nebraska converted to water would be 10-25 mm, the first important precipitation in more than 60 days," say Martell Crop Projections.