EU wheat futures closed mixed but mostly higher with Mar 13 London wheat up GBP2.10/tonne to GBP214.40/tonne, benchmark May 13 up GBP2.15/tonne to GBP216.40/tonne and new crop Nov 13 GBP2.45/tonne higher at GBP193.00/tonne. Mar 13 Paris wheat was EUR0.75/tonne higher at EUR248.50/tonne.
For the week overall that places old crop London wheat GBP1.40-GBP2.40/tonne higher and new crop Nov 13 GBP5.70/tonne firmer, whilst Mar 13 Paris wheat added EUR1.25/tonne. Sterling weakness continues to support the London market relative to that in Paris.
The pound has fallen off a cliff against the euro, slumping to close the week at just 1.15 versus the single currency for a 6.5% decline since the turn of the year. After it's biggest one day drop since May 2010 today, sterling hasn't been this low against the single currency since October 2011.
Yesterday's soft wheat export license figures from Brussels now mean that sales in 2012/13 are now running almost 40% up on this time a year ago, an astonishing increase and one that is still rising steadily. This may lead the USDA to review their estimate for EU wheat exports in next week's WASDE report released on Friday. The January report only pegged EU wheat exports 5% higher in 2012/13 than last season.
The American markets continue to be heavily influenced by the weather forecasts from South America. Whilst these are critical for developing corn and soybeans, the wheat harvest there is already passed, and what we do know is that it was a bit of a disaster.
The USDA's attaché in Buenos Aires today cut his estimate on wheat production in Argentina to 10.3 MMT, which is 0.7 MMT lower than the current official USDA estimate (and even that might be optimistic compared to forecasts from the various local grain exchanges of 9.3-9.8 MMT).
What was particularly interesting was the revised forecast from the attaché for wheat exports of only 4.3 MMT this season - the lowest volume in 24 years and down by 66% on the USDA's 2011/12 figure of 12.9 MMT.
We've already had sharply reduced wheat exports from Russia and Ukraine this season, now it looks like Argentina is also to be relegated to only play a relatively minor role on the international stage. There is one country though with plenty of wheat to sell, especially if the buyer isn't too discerning on quality: India. Their wheat reserves at the turn of the year were said to be 34.4 MMT and they start harvesting the 2013 crop at the end of next month.
They've really been flexing their export muscles lately, picking up tenders from Ethiopia, South Korea and Yemen this week. One news wire today is reporting that a UK company has bought two cargoes (80,000 MT) of Indian wheat for shipment by March 10. Of course that doesn't necessarily mean that the wheat is coming to the UK, but it's an interesting development.
Most of the reported Indian business this week has been at around USD314/tonne FOB (circa GBP200/tonne), although they have also been actively selling new crop wheat too for April/May shipment at around USD305-308/tonne FOB (around GBP195/tonne).
One buyer that won't be importing Indian wheat is Egypt, despite saying earlier in the week that they had sufficient wheat stocks to last until the middle of June, they issued a tender for wheat for March shipment late in the day.
