01 April 2015 | Online since 2003

EU Reports

1 April 2015 | EU Reports
01/04/15 -- EU grains closed mostly higher with May 15 London wheat up GBP1.50/tonne at GBP122.00/tonne, May 15 Paris wheat up EUR3.25/tonne to EUR190.75/tonne, Jun 15 Paris corn up EUR0.50/tonne at EUR164.25/tonne and May 15 Paris rapeseed up EUR1.25/tonne at EUR368.25/tonne.

Fresh news was relatively light following yesterday's USDA releases. These early acreage numbers are of course far from yet being written in tablets of stone, and much can change between now and the finish of the planting season.

Indeed, a flick back through the record books shows that the January "final" acreage estimate has differed from the Mar 31 forecast by as much as almost 2 million acres on the high side to more than 3 million on the low side in the case of corn in the previous 10 seasons.

The final area on soybeans has also proved to be 2-3 million acres wrong three times in the last 10 years. As you might expect the USDA has the best track record on wheat acreage, as most of that crop has already been in the ground for some considerable time when the Mar 31 estimates are released, even so the final planted area has been 2-3 million over-estimated in 2 of the previous 4 seasons.

So ultimately, we are not really much wiser today than we were yesterday morning. The US wheat market appears torn between the fact that fund money is short, and appears more inclined to buy on the dips rather than look to actively extend that position too much. There are also well reported question marks over the state of US winter wheat on the Plains. On the flip side we have the perennially strong US dollar continuing to harm US wheat export prospects.

Closer to home, EU wheat exports remain very robust, and look currently set to beat even last season's record pace - we are currently ahead of it by 7.5% - with another set of export licence figures due tomorrow. Export licenses have been granted for more than 3 MMT of soft wheat in the past 3 weeks.

EU barley exports are also going well, with ODA saying that France could leapfrog Australia into top spot in the world export table this season. They'd exported more than 3 MMT of the grain in the first half of 2014/15, and are set to ship more than 2 MMT to China alone this season, which is more than a third of all their total import requirements which are placed at a record 6 MMT in 2014/15 as they buy large volumes of coarse grains to compensate for their lack of corn purchases from the US over GMO issues.

China will occupy second top slot in the world barley import league in 2014/15, only 0.5 MMT behind Saudi Arabia, according to the latest USDA estimates.

Russia's intervention purchases are picking up due to the excessive export duty on wheat. This means that local prices are declining, enabling the government to pick up more wheat for domestic stocks than they had been doing previously.

They bought just under 26,500 MT of wheat for intervention today, taking the total purchased so far this season to just under 517 TMT.

The Russian National Association of Exports though say that current low prices of grain, plus the high cost of seed and other inputs could lead to "mass bankruptcies" among cash-strapped local growers and a sharp decline in cereal production this year.

Kazakhstan forecast their 2015/16 grain crop at 17.2 MMT in clean weight, unchanged from last year.

UK feed wheat prices continue to fluctuate more in line with US and French corn levels than anything else, say the HGCA. "Further volatility in US corn futures is likely to impact UK wheat futures in a similar way before greater clarity of the size of the US corn crop is obtained come harvest 2015," they add.

Currency changes will also of course be a factor, and a weak sterling in the run-up to the General Election seems like a possibility, and one that might support London wheat a little, as it seemed to today.

1 April 2015 | EU Reports
31/03/15 -- EU wheat traded mostly lower in the run-up to today's USDA planting intentions and stocks reports due for release at 17.00 BST. Chicago wheat staged an infamous "turnaround Tuesday" session, essentially erasing almost all the gains achieved on Monday, setting the tone for EU wheat.

At the finish, May 15 London wheat was down GBP2.25/tonne at GBP120.50/tonne; May 15 Paris wheat was EUR3.75/tonne lower at EUR187.50/tonne; Jun 15 Paris corn was unchanged at EUR163.75/tonne; May 15 Paris rapeseed was up EUR3.25/tonne at EUR367.00/tonne.

Oil World said that global oilseeds production will rise 5.5% this season to a record 523.3 MMT, led by an 11% increase in soybean output to a new all time high 312.8 MMT. Rapeseed production will fall slightly, down 1.7% to 68.4 MMT, they added.

Ukraine said that they'd exported 26.78 MMT of grains so far this season, including 9.7 MMT of wheat, just over 4 MMT of barley and 12.74 MMT of corn.

Early spring grain plantings in Ukraine are said to be 43% complete on more than 1 million ha, with spring barley accounting for the vast majority of that (780k ha) - winter wheat plantings are only 80k ha.

Winter grains in Ukraine have been fertilised on 83% of the planted area, along with 80% of the winter OSR area, say the Ag Ministry.

Russia's wheat exports have dropped off markedly since the new export duty came into force on Feb 1. Exports Feb 1 to Mar 25 were only 882 TMT in the case of wheat, down 240% versus 1.8 MMT in the same period a year ago.

Russia now appears to be concentrating on barley exports, as these are up massively at 932 TMT Feb 1 to Mar 25 as opposed to only 91 TMT a year ago.

Russia's season to date export totals are 19.35 MMT in the case of wheat (versus 15 MMT a year ago), with barley coming in at 4.27 MMT (2.08 MMT) and corn at 1.91 MMT (3.02 MMT).

The president of the Russian Grain Union has apparently said that it is “necessary” to cancel the wheat export duty before it expires on June 30, according to a story on Bloomberg.

Jordan are tendering for 100 TMT each of hard milling wheat and feed barley for Oct/Nov shipment.

29 March 2015 | EU Reports
27/03/15 -- EU grains closed mixed on the day, but lower across the board for the week, as thoughts turn to new crop.

At the finish, May 15 London wheat was GBP2.10/tonne easier at GBP121.55/tonne, May 15 Paris wheat was up EUR0.25/tonne at EUR188.75/tonne, Jun 15 Paris corn rose EUR0.50/tonne to EUR162.50/tonne and May 15 Paris rapeseed fell EUR3.75/tonne to EUR363.75/tonne.

For the week, that puts London wheat down GBP1.85/tonne (-1.5%), with Paris wheat falling EUR8.00/tonne (-4%), corn dropping EUR1.25/tonne (-0.8%) and rapeseed losing EUR7.50/tonne (-2%).

It's interesting to see Paris wheat as the biggest loser there, considering the strong export demand for that grade of wheat.

Brussels confirmed last night that they'd issued a further 721 TMT of soft wheat export licences, taking the season to date total to 24.4 MMT, up 7.5% on this time last year.

Algeria were said to have bought 450 TMT of optional origin wheat in a tender, which is widely believed to most likely be French material.

The HGCA meanwhile raised their forecast for the UK's 2014/15 exportable wheat surplus by more than 400 TMT to 3.87 MMT, a more than threefold increase on a year ago. Carryover into next season looks certain to be very high, given that the UK had only exported a little over 1 MMT of wheat by the end of January (the most recent figures available).

It's the GBP8.75/tonne premium on offer between old crop May 15 and new crop Nov 15 that's providing the incentive to carry UK wheat, even if that is down a little on a week ago when the differential was GBP9.60/tonne. You'd probably have to expect that trend to now continue to narrow.

Coceral forecast the 2015 UK wheat crop to fall 12.8% to 14.4 MMT. They've got plantings at 1.892 million ha, which is probably about right, and towards the middle of the HGCA's suggested 1.8 million and Origin's 1.95 million.

UK yields will fall to 7.61 MT/ha this year, down 11% from last year, they estimate.

They see the UK barley crop down 8.6% to 6.4 MMT and the domestic OSR crop to fall 11% to 2.23 MMT.

Production of wheat, barley, corn and OSR is seen lower in many other of the major EU countries too, with the exception of France (soft wheat +1.6% and barley +4.5%), Spain (soft wheat +3.8%) and Denmark (wheat unchanged from a year ago).

Germany's soft wheat crop will fall 8.9%, with barley production down 9.7% and OSR output dipping 15.3% this year, they say. Poland will see it's soft wheat crop fall 8.6%, whilst barley production will be down 3.1% and that of OSR declining by 10.1%.

Meanwhile the Czech Republic will see double digit percentage losses on all three of those crops, whilst Romania's soft wheat, corn and OSR crops will all fall between 10-15%, and Hungary's soft wheat and corn output will post declines of 15-18%.

French crop conditions for winter wheat were estimated at 90% good to very good by FranceAgriMer, down a point on a week ago, but up 14 points compared to this time last year. Winter barley was also rated 90% good to very good, unchanged on a week ago and 17 points up on last year.

Whilst French crop conditions are therefore significantly ahead of a year ago, crop maturity is not. FranceAgriMer say that only 48% of winter wheat is currently displaying an ear of at least 1cm in length, which is 20 points below this time last year. Winter barley at the same stage is 46% versus 67% a year ago.

The HGCA said that spring barley planting in the UK is about 40% done, and that spring oats and wheat are about 50% sown. Spring OSR planting is only just getting going at 3% complete.

Winter crop conditions in the UK are generally pretty good, and crop growth is "fairly normal", they added.

26 March 2015 | EU Reports
25/03/15 -- EU grains closed mixed, with London wheat higher and the Paris grains lower.

At the finish, May 15 London wheat was up GBP1.05/tonne at GBP123.65/tonne; May 15 Paris wheat was EUR1.25/tonne lower at EUR191.25/tonne; Jun 15 Paris corn was EUR0.75/tonne easier at EUR162.00/tonne; May 15 Paris rapeseed was down EUR4.00/tonne at EUR366.00/tonne.

London wheat got a helping hand following the news that UK inflation had fallen to zero, keeping thoughts of interest rate rises on the back burner, and putting the pound under pressure. Sterling is likely to be in for a bit of a bumpy ride in the run up to the general election on May 7.

Spring grain plantings in Russia are said to be complete on 731k ha, or 1.4% of plan. Progress in Ukraine is said to be already 30% done.

Russia’s Ag Ministry estimated winter grain losses at 16.8%, down from 21% previously.

The head of the Russian agrometeorological centre told Bloomberg that 9% of winter grains were in a bad condition versus 3% a year ago.

The debate over Russian farmers' ability to fund the spring planting programme continues. Bloomberg reported that farmers face "colossal damage" without timely funding. The government say that the effective loan rate for Russian spring sowing is only 3-7%. Private reports suggest that it is in fact many times this.

The Russian export duty on wheat means that intervention purchases are picking up. The government bought 30,510 tons of intervention grain today, taking the total bought since purchases began on Sep 30 to 473,290 MT. That's still well below the government target though.

Iran bought 80,000 MT of German and Black Sea wheat for April shipment in a tender.

The Canadian Wheat Board estimated the global wheat crop at 703.4 MMT this year, down nearly 3% from 724.8 MMT in 2014.

They see no sign of a let up in European wheat exports in 2015/16, predicting these to rise to a record 32.35 MMT versus the estimated 31.5 MMT this season. That would place Europe at the top of the global wheat export table for another year.

Ukraine's 2015/15 wheat exports will fall 12% to 9.7 MMT next season, and Russia's will drop a similar percentage to 17.4 MMT, they predict.

The Indian Ag Ministry said that this year's expected record, or near record, wheat crop may in fact come in significantly lower than hoped for due to late rain and hail damage immediately prior to harvesting. An area of 12.1 million ha (40%) of the planted 30.6 million ha has been affected, with rains up to 3 times more than normal having fallen between Mar 1-18, they said.

25 March 2015 | EU Reports
24/03/15 -- EU grains closed mostly lower, seemingly taking a little breather after prices have risen 8% in Paris wheat in little more than 2 weeks.

At the finish, May 15 London wheat was GBP1.50/tonne easier at GBP122.60/tonne, May 15 Paris wheat was down EUR3.00/tonne at EUR192.50/tonne, Jun 15 Paris corn fell EUR0.50/tonne to EUR162.75/tonne and May 15 Paris rapeseed dipped EUR1.50/tonne to EUR370.00/tonne.

Market attention is now turning to new crop. Yesterday's MARS yield estimates suggest lower 2015 production in most European countries this year.

If we match their yield figures with the HGCA's area estimate then the UK is in for a 2015 wheat crop of around 14.5 MMT this year. That would be a near 12.7% fall on production last year, if correct, although many consider that the HGCA are possibly a bit low with their wheat area forecast this year.

Using Origin Enterprise's area figure of 1.95 million ha, then the UK will produce a wheat crop of 15.75 MMT, a more modest 5% fall compared with 2014. I'd have to say that this is more like the sort of ballpark that I'd be in at the moment, although there's still a long way to go to the finishing post just yet.

The HGCA's winter barley area estimated, teamed up with MARS's yield figure, would give us a UK winter barley crop of 2.8 MMT versus around 3 MMT last year. On OSR a combination of the two estimates would suggest a winter OSR crop of 2.5 MMT. That seems like it could be significantly too high to me. Both the HGCA's area forecast and the MARS yield estimate are both too high to my mind.

MARS also forecast significant reductions in yields of wheat and barley in Ukraine this year, with the former dropping 10.6% and the latter by 19.1% compared with a year ago.

UkrAgroConsult meanwhile today predicted the Ukraine corn area to decline 10% to 4.4 million ha, with output falling 11.2% to 23.0 MMT this year. They also see wheat production in the war-torn country down by 8.4% to 20.6 MMT.

Early spring planting in Russia has been completed on 663k ha, or 1.3% of plan, according to the Ag Ministry there. Reports suggest that winter crop conditions in the important Volgograd region are rated 40% in poor condition, with only 20% of the crop described as "good".

Russia's two largest agricultural lending banks say that they've increased lending to fund spring plantings by just 1.2% this year. This is a very low rate of increase given the plunge in value of the rouble and the rising rate of inflation.

The cost of seed, fertiliser and herbicides/pesticides in Russia are said to be up by 40-60% compared with 12 months ago.

Few "ordinary" farmers can come up with the collateral to get a loan from the bank, despite government assurances that credit is available at special discounted rates to fund spring plantings, and those that can get a loan are being asked to pay around 22-27% interest, which is around double the rate of a year ago.

This would suggest that many winter crops that are in trouble may simply be left to their own devices, rather than being ripped up and re-planted. It might also suggest lower spring acreage than the government currently predict, and certainly lower yields as a result of reduced fertiliser/agrochemical applications.

Algeria are tendering for 50 TMT of optional origin new crop wheat for July shipment. Oman are in the market for 60 TMT of new crop Russian/German wheat for July/August delivery.

24 March 2015 | EU Reports
23/03/15 -- EU grains closed mixed, having been higher for much of the day. A firmer euro may have taken some of the shine off early Paris gains.

The day ended with new front month May 15 London wheat unchanged at GBP124.10/tonne, May 15 Paris wheat fell EUR1.25/tonne to EUR195.50/tonne, Jun 15 Paris corn dipped EUR0.50/tonne to EUR163.25/tonne and May 15 Paris rapeseed was up EUR0.25/tonne at EUR371.50/tonne.

The EU Commission's MARS unit released their first estimates for 2015 yields today.

Overall they put EU-28 soft wheat yields down 4,8% at 5.79 MT/ha, with barley yields falling 5.5% to 4.6 MT/ha, corn yields down 4.3% to 7.19 MT/ha and those of OSR slumping 9.4% to 3.24 MT/ha.

Soil water availability is becoming a concern in eastern Germany, the Czech Republic and Poland, they said.

Specifically they peg German soft wheat yields down 11.7%, with barley yields falling 8.3% and OSR yields dipping 14.1% this year.

In the UK, we will see wheat yields decline 6.3%, barley yields will drop 7.1%, although those of OSR will only fall 0.9%, they reckon.

Large yield falls will also come from the Czech Republic, Hungary, Poland and Romania, they add.

"Areas along the northern and eastern borders of Ukraine, as well as southern Russia and some areas close to the Black Sea, appear to have been considerably affected by frost kill, due to severe frost events coinciding with no or shallow snow cover until mid-January, they note

"Moreover, winter crop establishment was weaker than usual in these regions, as a consequence of insufficient rain and dry soil conditions at the start of the crop season last autumn," they add.

US wheat prices rose today, with a hard frost in the forecast to reach far south into Nebraska, Kansas, Oklahoma and Colorado this week.

Untimely and unwanted heavy rains and hail are also being reported to have damaged the Indian wheat crop just as harvesting was about to begin. Production there could fall 30-50% this year, according to SkyMet. That sounds like a huge amount as India's crop was expected to be close on 100 MMT this year, so this would be a near 30-50 MMT loss if correct, but the news may have lent some support to today's trade nevertheless.

Bangladesh re-issued a tender to buy 100 TMT of wheat.

Russia said that they had exported only 829 TMT of wheat between Feb 1 - Mar 18 (ie since the new export duty came into force), which is 34% less than a year ago.

19 March 2015 | EU Reports
18/03/15 -- EU grains closed mixed, although generally there was little change either way from yesterday.

The day ended with Mar 15 London wheat down GBP0.10/tonne at GBP119.75/tonne, May 15 Paris wheat fell EUR0.75/tonne to EUR192.25/tonne, Jun 15 Paris corn dipped EUR1.00/tonne to EUR163.75/tonne and May 15 Paris rapeseed was up EUR1.00/tonne at EUR370.25/tonne.

Yet again fresh news of any great note was scarce.

Although soon to expire and tradeless Mar 15 London wheat officially closed slightly lower, the more active May 15 finished up GBP0.50/tonne at GBP121.75/tonne, and new crop Nov 15 was GBP0.80/tonne higher at GBP130.45/tonne.

A near GBP9.00/tonne premium to carry old crop six months into new crop explains why many UK farmers remain relatively relaxed about the substantial volume of last year's harvest that they are still sitting on.

The HGCA said that nearby UK wheat prices were following the French corn market much more closely at the moment than they are mimicking French wheat.

"For new crop, on the other hand, movements have been much more in line with other wheat markets," they noted.

There was some support for London wheat today from a weaker sterling/euro, following the release of the Bank of England's MPC minutes of their March meeting showing a unanimous vote to keep interest rates on hold at 0.5%.

The Committee said that whilst they do expect interest rates to rise, the time scale mentioned was only "over the next three years" - which hardly sounds like an increase is just around the corner.

So the pound traded a bit lower versus the euro, which in theory will help UK wheat become a bit more competitive on the export front. That's something that it certainly needs to be.

Reuters reported that German wheat exports could hit as much as 1.0 MMT in March. To put that into perspective Germany only exported 3.9 MMT of wheat in the whole of last season, including just 360,000 MT in March 2014.

The Ukraine Ag Ministry said that growers there have 100% of their seed requirements for the spring sowing campaign already bought. They've also got 88% of their fertiliser needs contracted along with 73% of their fuel.

The first thing that strikes me about that is "how do you know that?" The second thing being "you're making this up aren't you?" Followed by the fact that they need 100% of their fuel, not 73% of it, to carryout the required fieldwork.

The Ministry said that they expect to formulate (make up) some early crop production forecasts by the end of the month.

The Russian's are predictably not so shy. Their Ag Minister has already estimated this year's grain crop at 100 MMT (versus 105.3 MMT last year), but today said that because of the early start to the spring sowing campaign that this would probably be increased higher.

Crops emerging from winter dormancy in the south of the country are looking in better shape than expected, with winter losses therefore likely to be less than feared, he said.

19 March 2015 | EU Reports
17/03/15 -- EU grains closed mixed, but wheat was mostly a little higher with Paris wheat closing at the best levels for a front month since late January.

At the finish, Mar 15 London wheat was up GBP0.90/tonne at GBP119.85/tonne; May 15 Paris wheat was EUR0.25/tonne higher at EUR193.00/tonne; Jun 15 Paris corn was EUR0.25/tonne lower at EUR164.75/tonne; May 15 Paris rapeseed was EUR1.75/tonne easier at EUR369.25/tonne.

Fresh news was relatively scarce. Strong exports, helped by the weak euro, continue to support the continental market.

The HGCA said that the Scottish winter wheat area was up 2.3% (as of Dec 1) at almost 105k ha. Add that to their previous forecast of 1.69 million ha for England and Wales and we get a UK area of around 1.8 million ha (excluding Northern Ireland where very little is grown).

That's around 100k ha down on last year, "meaning that the gap could potentially be filled by spring plantings,"they say.

It's higher than Copa Cogeca's recent 1.687 million ha estimate, but lower than Origin's 1.95 million ha forecast.

The HGCA went on to estimate the Scottish winter barley area at just over 55k ha, with the winter OSR area north of the border coming in at almost 36.5k ha.

Those numbers take the total UK winter barley area to around 426k ha versus 421k ha a year ago. Winter OSR plantings are at almost 670k ha versus a total OSR area of 719k ha this time last year.

In other news, Rusagrotrans forecast Russia's March grain exports at around 1.1 MMT, falling to 1 MMT in April, 725 TMT in May and 675 TMT in June.

That equals 3.5 MMT over the entire period, and would take the nation's full season grain exports to around 28 MMT versus 25.3 MMT last season.

Wheat will account for 20.4 MMT of this season's exports (73%), along with 5 MMT of barley (18%) and 2.3 MMT of corn (8%), they say.

In 2013/14 Russia's wheat exports were 18.3 MMT, or 72% of total grain shipments, with barley accounting for 2.7 MMT (11%) and corn 4 MMT (16%), they added.

Russian spring grain plantings are still at their fledgling stage at only 0.8% complete on an area of 295k ha, say the Ag Ministry. Ukraine spring grain plantings are 8% complete on 184k ha.

Ukraine said that their Mar 1 grain stocks were 19.3 MMT, up 22% on a year ago. Wheat accounts for 6.2 MMT of that total, along with 1.6 MMT of barley and 10.7 MMT of corn, say their Ag Ministry.

Independent agronomist Mike Lee and his team will begin a 4,000 km 10-day crop tour of southern Russia and Ukraine starting in Kursk, focusing on crop condition of the over wintered crops, starting next week.

18 March 2015 | EU Reports
16/03/15 -- EU grains closed mostly higher, reversing early losses, after the US wheat market turned sharply higher in afternoon trade.

At the finish, Mar 15 London wheat was GBP1.1/tonne firmer at GBP118.95/tonne, May 15 Paris wheat was up EUR2.50/tonne at EUR192.75/tonne, Jun 15 Paris corn rose EUR0.75/tonne to EUR165.00/tonne and May 15 Paris rapeseed climbed EUR2.00/tonne higher to EUR371.00/tonne.

Copa Cogeca estimated the EU-28 soft wheat crop in 2015 at 138.42 MMT, a fall of 6.5% versus a year ago. They see production in France virtually unchanged on last year at 37.4 MMT, but output will fall in many other countries with the exception of the Czech Republic (up 3.1% to 5.6 MMT) and Romania (up 2.3% to 7.57 MMT).

Here in the UK, the 2015 wheat crop will fall 15.9% to less than 14 MMT, they predict. Germany will see it's output decline 9.2% to 25.16 MMT and Poland will witness a drop of 14.3% to 9.24 MMT. Spain's production will decline 1.2% to 5.63 MMT, but the biggest fall of all will come from Bulgaria, whose crop will tumble 38.5% to just 3.15 MMT, they estimate.

Reduced plantings and lower anticipated yields are a recurring theme among those countries expected to see a decline in output this year.

Joining in with the debate over how far, if at all, UK wheat plantings have fallen this year, Copa Cogeca estimate the planted area here at only 1.687 million hectares. That's broadly in line with the HGCA's England and Wales reckonings, but well below the figure of close on 2 million given by Origin Enterprises last week, and represents a year-on-year decline of 12.5%.

UK yields will average 8.28 MT/ha this year, down nearly 4% from a year ago, Copa Cogeca forecast.

For barley, they see the EU-28 crop down a hefty 18% to only 46.65 MMT, according to their official press release. This data appears incomplete however, as they give no figures for spring barley production in either France or the UK. The UK winter barley crop is forecast at just under 2.5 MMT versus a little over 3 MMT last year.

For corn, Copa Cogeca estimate the EU-28 crop down 4.6% at 68.92 MMT.

The soft wheat and corn estimates are in the ballpark of those released by Strategie Grains last week (140.4 MMT and 68.2 MMT respectively). The barley number however is massively different compared to the French analysts figure of 58.1 MMT, and maybe should be taken with a pinch of salt.

Copa Cogeca meanwhile estimate the EU-28 OSR crop to fall 6.9% to 21.95 MMT, a three year low, with a planted area down by 2.2% and yields dropping 4.8%. They see the French crop down slightly at 5.48 MMT, but see UK production falling 9.2% to 2.27 MMT and the German crop falling a hefty 15.3% to 6.22 MMT - even if they do still retain top spot in the EU production table.

The sharp decline in EU rapeseed production expected this year is mainly as result of the neonicotinoid seed treatment ban, they said.

The chairman of the oilseeds working party Arnaud Rousseau said that "the situation is very serious, with declines of up to 1 million tonnes in rapeseed production estimated in Germany...What makes it worse is that there are no alternative tools for crop protection for the spring varieties and crops are being destroyed by flea beetle attacks."

11 March 2015 | EU Reports
11/03/15 -- EU grains closed higher, spurred on by steadier US markets and another bout of dollar strength.

At the finish, Mar 15 London wheat was GBP1.45/tonne firmer at GBP117.90/tonne, May 15 Paris wheat was up EUR2.00/tonne at EUR188.00/tonne, Jun 15 Paris corn rose EUR3.25/tonne to EUR165.25/tonne and May 15 Paris rapeseed climbed EUR5.25/tonne higher to EUR371.00/tonne.

The pound crashed below 1.50 versus the US dollar, to hit its lowest levels since July 2013. The euro meanwhile took an absolute pasting, slumping to a new more than 7-year low against the pound, and levels not seen versus the dollar in 12 years. Some are now suggesting that euro parity with the US currency could be tested soon.

All that bodes well for EU wheat exports to continue apace, these are of course already running at levels better even than last season, which went on to be a record.

Before the market gets too cocky though, it needs to be remembered that crop prospects in Europe this year are generally looking pretty good. Although wheat production is seen down, according to the latest estimate from the EU Commission, ending stocks next season are forecast at a 10-year high 19.5 MMT - up 40% on this year.

The Commission also forecast another bumper EU barley crop in 2015/16, along with rising ending stocks for that too.

"France, the top EU wheat producing country, has experienced much cooler conditions 2-4 F below average for the past several weeks. Temperatures a year ago were 4-5 F warmer. As wheat is a 'cool season' crop, wheat potential this season is deemed better," said Martell Crop Projections. This is backed up by the latest crop condition ratings from FranceAgriMer showing wheat rated 91% good to very good,far higher than 74% this time a year ago. Winter barley ratings were pegged at 90% good to very good, up from 72% a year ago.

"Indeed, all of Europe has experienced cooler temperatures this season, confirmed by a comparison of temperatures in the 45 days up to March 10. Germany, Europe’s second leading wheat nation, one year ago was in the throes of a serious drought. Precipitation has been relatively heavier this winter, which is more favourable for wheat, although one or two stubborn dry pockets have continued in eastern Germany," they added.

In other news, Rusagrotrans said that Russia would export around 1 MMT of grains this month, down from 1.23 MMT in February.

Barley exports would unusually outstrip those of wheat at 400 TMT, which is 50 TMT more than the latter grain, they said.

The Russian Ministry are a bit more bullish on grain exports, predicting that the country will still ship out 5 MMT more between now and the end of the current marketing year at the end of June. That would take this season's exports to around 30 MMT.

The Ministry also said that there were currently no plans to alter the export duty situation on wheat, nor to bring corn or barley into the equation.

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