EU Grains Close - Thursday

10/01/13 -- EU wheat futures closed mixed with Jan 13 London wheat up GBP1.10/tonne to GBP207.00/tonne, benchmark May 13 GBP1.35/tonne higher at GBP209.50/tonne and new crop Nov 13 GBP0.50/tonne firmer at GBP183.75/tonne. Expiring front month Jan 13 Paris wheat was EUR6.25/tonne lower, although other old crop months were only EUR0.75/tonne easier.

The market continues to tread water ahead of Friday's USDA report, hoping for some much needed direction. Will we get it?

Brussels reported that it had granted 603 TMT of soft wheat export licenses in the last fortnight of 2012, along with a further 373 TMT in the first week of January. That takes 2012/13 year-to-date exports to 10.1 MMT, which is more than a third up on a year ago despite reduced production.

Based on that evidence there are few signs yet of inflated EU prices restricting exports this season. The HGCA today referred to 2013 being a year of "tight global feed grain supplies" noting "the need for demand to be rationed".

Egypt confirmed that it had bought 115 TMT of US/Canadian wheat in a tender, with US wheat priced at USD24/tonne cheaper than the best French offer. Maybe that is a sign of things to come?

The HGCA went on to note that "EU values need to remain at premium levels to minimise exports due to thin availability".

Weekly export sales data from the USDA came in below expectations for wheat of 325-425 TMT at 233,700 MT. Shipments too were pretty insipid at 264,400 MT, although this does include the holiday period. Things will now need to buck up fairly dramatically for the rest of the season to get even close to the USDA's target volume of 29.5 MMT in 2012/13, although this isn't totally out of the question.

The market will also be conscious of the 2012 US drought being far from resolved this winter, with some reports suggesting abandonment rates amongst US winter wheat as high as 30 percent.