European wheat crop 'looking in far better shape' than US counterpart
Chicago wheat traded with decent overnight gains, partly on concerns of further damage to US winter wheat on the Plains over the weekend, and also on the news that the Ukraine crisis has now spread to the major southern seaport of Odessa.
May 14 Paris wheat closed EUR1.50/tonne higher at EUR216.75/tonne, Jun 14 Paris corn rose EUR2.25/tonne to EUR186.00/tonne and Aug 14 Paris rapeseed ended the day EUR2.25/tonne lower at EUR357.00/tonne.
The European market, at least for now, appears to be viewing the problems in the US as being more specific to their own domestic market. Additionally, the Ukraine-encouraged speculative element also appears to be more of an influence across the Atlantic than it is here, again at least for now.
Versus the May 1 closes, in mid-afternoon European trade Chicago wheat stood 3.2% higher, with Minneapolis wheat up 3.6% and Kansas wheat 3.8% firmer - all basis the Jul 14 future. May 14 Paris wheat has gained only 0.7% during this time.
Why should that be? Well, the European wheat crop is looking in far better shape than it's US counterpart (and it seems that its going to be early too). Note though that this isn't anything particularly out of the ordinary. The average US wheat yield in 2013 was only 3.17 MT/ha - about the same as that of India. The average yield in Europe was 75% higher than that. The average 2013 UK yield was more than 132% above those reached in the US, and in the case of Germany it was more than 150% higher.
If Europe would have had the average American wheat yield in 2013, then the crop here would only have been 81.5 MMT, as opposed to the near 143 MMT actually achieved. Conversely, had the US got the same yields as here in Europe last year then their crop would have been over 100 MMT instead of just 58 MMT.
The point is, in the case of wheat at least, maybe what is happening in America doesn't - or at least shouldn't - hold as much sway globally as it does for soybeans or corn. The US produced around 8% of the world's wheat crop in 2013, as opposed to 32% of its soybeans and 36% of its corn.
In other news, the Ukraine Ministry said that the country had exported 29.55 MMT of grains so far this season, including 18.53 MMT of corn and 8.39 MMT of wheat.
APK Inform said that Ukraine's grain exports via seaports fell to 372.6 TMT last week, down from 455.5 TMT the week previously. Wheat accounted for 175 TMT of that, and corn a further 185 TMT. It's probably too early to read anything too significant into that just yet.
The Russian Ministry reported spring wheat plantings at 10% complete, with spring barley almost 53% done and nearly 58% of the anticipated 2014 corn area now sown in a timely manner.
Saudi Arabia bought 475 TMT of hard wheat and 115 TMT of soft wheat in a weekend tender. The delivery period is Jul/Aug, and the accepted countries of origin were EU, US, Australia and South America.
Egypt said that, following last week's purchase of Ukraine and Russian wheat, it has sufficient volumes of the grain bought/in stock to last it through to early July.
The grain market fundamentals however remain overshadowed by events in Ukraine, especially so following the weekend violence in the major grain export hub of Odessa.
With elections now less than 3 weeks away, Kiev are said to have drafted "special forces" into the port city - reported to have a broad ethnic mixed population of around a million people. According to Reuters, the interim government have today sacked the entire leadership of the local police force in Odessa, and said that they could now face criminal action. The move came after the releasing without charge of 67 largely pro-Russian militants arrested over the weekend, to appease protesters besieging the local police station on Sunday night.
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