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25 August 2016 | Online since 2003
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EU Reports

25 August 2016 | EU Reports
24/08/16 -- EU grains closed mostly higher on the day except for London wheat which was lower on the back of an improved sterling.

The day ended with benchmark Nov 16 GBP0.85/tonne lower at GBP127.65/tonne. Sep 16 Paris wheat traded EUR2.50/tonne higher at EUR158.50/tonne, Nov 16 corn was up EUR1.25/tonne at EUR166.00/tonne and Nov 16 Paris rapeseed was EUR0.75/tonne higher at EUR378.78/tonne.

The pound closed above 1.32 vs the US dollar and 1.17 compared to the euro tonight.

Now that he rain has gone away, the UK harvest can restart in earnest. "Wheat quality so far looks promising and with more milling type varieties in the mix, it is likely that the UK wheat crop can be of more use to the domestic miller, as well as the export customer, " says the HGCA's Jack Watts.

"If this is the case, and with support from weaker sterling, there could be less need to import milling wheat this season (2016/17). Looking at this ambitiously, we might hope that UK wheat imports fall below 1 MMT – for the first time since 2011/12," he adds.

The lowest offer in yesterday's Egyptian tender was Ukraine wheat at $171.10/tonne FOB (sterling equivalent GBP129.62/tonne), which is still far more competitive than anything the UK could put together - weak sterling or not. All 11 offers in that were from the Black Sea.

In other news, Russia said that they'd exported 3.63 MMT of grains this season so far (to Aug 18), a 4% drop on this time a year ago. That includes 2.98 MMT of wheat, 589 TMT of barley and 39 TMT of corn.

The Russian Ag Ministry said that this year's harvest was 59.1% complete at 86.9 MMT. That includes 58.9 MMT of wheat off 62.6% of the planned area, along with 15.2 MMT of barley (73% of plan).

Syria postponed their tender for 1 MMT of Russian wheat and Jordan made no purchase in their 100,000 MT feed barley tender.



24 August 2016 | EU Reports
23/08/16 -- EU grains closed mostly lower. London wheat was lower on the back of a slight improvement in sterling.

At the close Nov 16 London wheat was down GBP2.00/tonne at GBP128.50/tonne, Sep 16 Paris wheat was EUR3.00/tonne lower to EUR156.00/tonne, Nov 16 Paris corn was down EUR1.00/tonne at EUR164.75/tonne, Nov 16 Paris rapeseed was unchanged at EUR378.00/tonne.

This was the lowest close for front month Paris wheat since Jul 7.

Egypt apparently cancelled a tender for wheat for Sep 21-30 shipment with no reason offered. 11 bids were submitted.

Stats Canada estimated this year's Canadian wheat crop at 30.5 MMT, the second largest in recent years and up more than 10% on a year ago. That gave weight to the notion that the demise of the French crop this year is a "one off" and that there's plenty of wheat around elsewhere to make up the shortage.

The Russian grain harvest is said to be 57% complete at 82.3 MMT, of which 58.1 MMT is wheat (61% harvested).

The Ukraine early grain harvest is over at 37.9 MMT, with corn harvesting yet to begin. Ukraine analysts estimate final grain production at 62.7 MMT (60 MMT last year), of which 26 MMT will be wheat and 8.9 MMT barley. Grain exports are raised from 38.5 MMT to a record 40.7 MMT.

Ukraine growers have already planted 304k ha of winter rapeseed, or 42% of the planned area, for the 2017 harvest, the Ministry say.

Jordan made no purchase in their 100 TMT wheat tender, and immediately re-issued for the same.

After all their problems with rain disrupting the wheat harvest, France is now experiencing a heatwave just as corn is pollinating, which may cut yields for that crop also. Temperatures in the coming week are expected to be between 2 and 6 degrees above average, say Reuters.



23 August 2016 | EU Reports
22/08/16 -- EU grains finished mostly lower on the day amidst a general lack of fresh news. The pound was a bit firmer today, pressuring London wheat.

The day ended with Nov 16 London down GBP1.50/tonne at GBP130.50/tonne, Sep 16 Paris wheat was EUR3.75/tonne lower at EUR159.00/tonne, Nov 16 corn was down EUR1.00/tonne at EUR165.75/tonne and Nov 16 rapeseed was unchanged at EUR378.00/tonne.

MARS released their latest EU-28 crop yield forecasts, dropping soft wheat from 5.85 MT/ha to 5.63 MT/ha, some 3.9% down on last year but still slightly above the 5-year average.

"This is mostly due to yield estimates for soft wheat in France being lowered by 11% compared to the July forecast due to knock-on effects of large rainfall amounts, low radiation and consequent high disease pressure during late May and June," they said.

Corn yields were also lowered from 7.42 MT/ha to 7.23 MT/ha. "Exceptionally high maize yields are forecast for Hungary (+29.6% above the five-year average) but the forecast was lowered in Bulgaria and Romania where dry conditions compromised the maize yield potential," they added.

Private forecasts see the French corn crop at around 13.0-13.5 MMT this year, similar to last year. Germany's crop is seen down 7% and Romania's 15% lower.

This will be compensated for however by the sharp rise in Hungary already noted, plus a 33% jump in Polish output.

MARS forecast UK wheat yields at 8.08 MT/ha, down a smidgen from last month and 10% lower year-on-year. The HGCA currently see them at 7.8-8.0 MT/ha, but things could improve as the harvest progresses in the north.

The Russian grain harvest now stands at 80.7 MMT, of which wheat accounts for 57.5 MMT, according to the Ag Ministry there.

APK Inform say that Russian grain exports via seaports fell to 406.8 TMT last week (715.6 TMT the previous week), including 393.8 TMT of wheat.

Ukraine's seaports exported 647.7 TMT of grains last week (660.1 TMT the previous week), including 499.5 TMT of wheat, they add.



20 August 2016 | EU Reports
19/08/16 -- EU grains closed mostly higher on the day and for the week, with the exception of Paris wheat.

The day ended with benchmark Nov 16 GBP0.25/tonne higher at GBP132.00/tonne. Sep 16 Paris wheat traded down EUR0.75/tonne at EUR162.75/tonne, although other months were a touch firmer. Nov 16 corn was up EUR0.50/tonne at EUR166.75/tonne and Nov 16 Paris rapeseed was EUR0.25/tonne higher at EUR378.00/tonne.

On the weekly chart, London wheat added GBP1.25/tonne, Paris wheat fell EUR1.75/tonne, corn was EUR1.50/tonne firmer and rapeseed gained EUR8.50/tonne.

Despite all the doom and gloom surrounding French production this year, Paris wheat is struggling to gather much upside momentum. London wheat is getting more support from the ailing value of the pound than anything else, and rapeseed is simply following whatever Chicago soybeans do.

The latter are underpinned by strong export demand for US beans from China, and anything approaching the $10/bu mark is viewed as good value. With Brazilian supplies already very tight despite another big crop there again this year, and Argentine offers firming, the US is at an advantage to market a record crop of it's own in 2016/17. That should keep prices steady and lend support to rapeseed futures too.

Wheat supply and demand remains balanced between tightening supplies in Europe and bumper production elsewhere, not least Russia where this year's grain harvest has now reached 77.4 MMT off only 51.7% of the projected area.

That makes official estimates for a grain harvest of around 110-118 MMT look conservative. Wheat output so far this year is said to be at 53.5 MMT off 54.4% of the expected area. Again this makes official forecasts for a crop of around 69-72 MMT look low.

The Russian Ag Ministry today forecast 2016/17 total grain exports at nearly 40 MMT, eclipsing last season's record 33.9 MMT very comfortably indeed.

For now the trade is debating the viability of such numbers. Has Russia got the infrastructure to adequately store, move and ship such a volume, especially once the winter months arrive? Only time will tell.

If there are to be any supply disruptions than they could provide an opportunity for Europe, and even possibly the US to step in and make some unexpected sales.

For now EU wheat exports are running ahead of last year's pace by 24% following yesterday's release of 538 TMT worth of export licences by Brussels. A week ago though this figure was 31%. Barley exports meanwhile are down 60% year-on-year.

On the international front, Tunisia bought 50,000 MT of hard wheat in a tender. Jordan are in the market for 100,000 MT of feed barley.



19 August 2016 | EU Reports
18/08/16 -- EU grains traded mixed. London wheat gave up some of the recent gains that pushed prices to 18-month highs on the back of a slight improvement in sterling.

At the close Nov 16 London wheat was down GBP0.95/tonne at GBP131.75/tonne, Sep 16 Paris wheat was up EUR0.25/tonne to EUR163.50/tonne, Aug Paris corn was unchanged at EUR166.25/tonne, Nov 16 Paris rapeseed was down EUR2.00/tonne at EUR377.75/tonne.

The pound was firmer following much better than expected UK retail sales numbers for July.

It's worth noting that currently London wheat's fortunes are much more closely linked to the movement of the pound than fluctuations in the international wheat markets. Indeed, since the Brexit vote of the 14% gain that we have seen in Nov 16 London wheat, 11% of it is down to currency weakness (that's how much the pound is down against the euro during this time). The French wheat market has only seen a 3% gain during this period. despite the wholesale demise of their crop.

Good weather this week means that the French wheat harvest raced to 97% complete as of Monday, say FranceAgriMer. That's up from 87% a week ago and vs 99% done this tome last year.

French spring barley is 97% harvested against 78% last week and 100% last year at this time.

French corn crop condition ratings dropped 5 points in the good to very good categories to 63%.

Reuters reported that France is set to import Bulgarian wheat for the first time since the 2010/11 season, possibly to be re-exported to the US under a deal done some time ago. They are also said to be importing smaller quantities of UK wheat as well as the larger volumes of Romanian wheat already announced.

Brussels granted 538 TMT worth of soft wheat (season to date total 3.56 MMT) and 13 TMT worth of barley export licenses this past week along with 141 TMT of corn import licenses.

The HGCA/ADAS reported that the UK wheat harvest is now 40% complete with yields averaging 7.8-8.0 MT/ha. The winter barley harvest was 95% complete and winter oilseed rape harvest 90% complete, with only small areas left to harvest in northern England and Scotland, they said.

Good progress was made on the harvest of spring barley predominantly in the English regions (around 115,000 ha), bringing the harvest to 20% complete, they added.

An average UK yield of 7.9 MT/ha would produce a UK wheat crop of 14.17 MMT using official planting estimates of 1.794 million ha (16.44 MMT last year).

Ukraine said it had exported 4.85 MMT of grains so far this season, including 2.43 MMT of wheat, 444 TMT of corn and 1.90 MMT of barley. They've also exported 339 TMT of oilseeds. Good weather means that autumn/winter plantings for 2017 will increase 4% to 7.3 million ha, their Ag Ministry says. Wheat woild typically account for around 55% of the total area planted.



18 August 2016 | EU Reports
17/08/16 -- EU grains finished mostly higher on the day. Sterling weakness continues to provide support for London wheat, indeed the majority of the recent gains can be attributed to post-Brexit currency weakness rather than anything else.

The day ended with Nov 16 London up GBP1.05/tonne at GBP132.70/tonne, Sep 16 Paris wheat was unchanged at EUR163.25/tonne, Aug corn was down EUR0.25/tonne at EUR166.25/tonne and Nov 16 rapeseed jumped EUR6.25/tonne to EUR379.75/tonne.

The other developing storyline in the grains market is one of significantly lower EU production this year matched by sharply higher FSU output.

In theory one simply balances out the other. If you're Egypt and want wheat you simply pick up the phone to Russia (or Ukraine) and hang up on France for the next 12 months.

Or is it really as simple as that? Has Russia/Ukraine got the quality that you want? Can they guarantee to supply it exactly when you want, what about Dec 20-31 for example? They could be under 6 foot of snow by then.

Moreover, if the quality you are getting from them now is OK, what's it going to be like come the spring? Neither country is after all renowned for their prime quality storage facilities. What will their wheat be like come, say March, especially in a bumper production year such as this one?

The President of the Russian Grain Union today estimated the 2016 harvest at 114-118 MMT, including 69.5 MMT of wheat and ending stocks of 16 MMT. He went on to highlight the lack of adequate storage and Russia's ability to efficiently handle such a crop.

The President of Rusagrotrans raised his estimate for this year's grain harvest from 115.8-116 MMT to 118.5 MMT (with wheat upped from 70-71 MMT to 72-73 MMT) and barley increased from 18.3 MMT to 19.5 MMT.

This will be the best harvest since 1978, he said (up 13% from 104.8 MMT in 2015). Yet, August exports are only forecast at 3.5 MMT versus 4.2 MMT a year ago, partly due to grower disenchantment with current low prices.

The Ukraine Ag Ministry estimated 2016 grain production at 63 MMT, up 5% on last year, including 26 MMT of corn.

The EU trade seems to currently be thinking that there will be buyers for this season's reduced export availability, and that having Ukraine/Russia as a seller won't suit everyone. We shall see....



17 August 2016 | EU Reports
16/08/16 -- EU grains closed mixed, wheat was mostly firmer, with London wheat marching on to new highs.

The day ended with benchmark Nov 16 GBP0.75/tonne higher at GBP131.65/tonne. Sep 16 Paris wheat traded up EUR0.75/tonne at EUR163.25/tonne, Aug corn was unchanged at EUR166.50/tonne and Nov 16 Paris rapeseed was EUR2.25/tonne lower at EUR373.50/tonne.

The EU wheat crop keeps shrinking. This time it was Germany's turn to take a knock with the German Agri Cooperatives Association DRV cutting their forecast for 2016 grain production there from 44.7 MMT to 44.9 MMT due to "significantly lower estimated yields per hectare for all cereals. This year's result is more than 8 percent below last year's value," they said.

"Reason for the disappointing results are in particular the adverse weather conditions in recent months. While the corn has suffered mainly in the western and southwestern parts of the country under heavy rain, it was too dry partially in the north and northeast," they observed.

Wheat production was forecast at 24.2 MMT versus 25.4 MMT previously and some 9% below last year.

Winter barley production is seen down more than 9% at 8.8 MMT and spring barley output declining by almost 9% to 1.8 MMT.

Corn production is seen at only 4 MMT versus 4.5 MMT previously and the rapeseed harvest, which is largely complete, forecast at 4.5 MMT versus 4.9 MMT last month and 11% below 2015. "The oil contents are slightly lower than the previous year," they added.

Agritel said that the French wheat harvest should now be about 80% done and fine and dry weather in Germany will allow significant harvest advancement to be made this week.

Saudo Arabia bought 640,000 MT in a 12.5% hard wheat tender.

IKAR raised their estimate for the Russian grain harvest by 2 MMT to 116 MMT, upping wheat from 69 MMT to 70 MMT, noting the possibility for further increases. The USDA forecast wheat production in Russia at 72 MMT on Friday.

The Russian Ag Ministry say that the 2015 wheat harvest is only just past halfway through (50.9% done) producing a crop of 51.7 MMT already, so these estimates do seem a little low even if they are of a record magnitude and we allow for the bulk of what is yet to be harvested to be lower yielding spring wheat.

The trade debates the sharply improved results out of Russia, and their ability to export large quantities of this wheat successfully to the foreign market when it requires it, especially in the depths of the Russian winter.



16 August 2016 | EU Reports
15/08/16 -- EU grains began the week mixed, with benchmark Nov 16 London wheat trading close to the best levels on a front month since Jan 2015.

At the close Nov 16 London wheat was up GBP0.15/tonne at GBP130.90/tonne, Sep 16 Paris wheat was down EUR2.00/tonne to EUR162.50/tonne, Aug Paris corn was up EUR0.75/tonne at EUR166.50/tonne, Nov 16 Paris rapeseed shot EUR6.25/tonne higher to EUR375.75/tonne.

UK wheat continues to get the benefit of the falling pound, which slumped below 1.15 against the euro today, en route to 1.11 according to Morgan Stanley.

The demise of the French wheat crop, and at least some trouble for that in Germany too, also helps London wheat. It has to be noted though that the 9 MMT decline in European output signalled by the USDA on Friday is entirely compensated for by a 7 MMT hike in production in Russia and a 2 MMT rise for Ukraine. Add on another 2 MMT for Kazakhstan and the FSU more than makes up for this year's EU shortfall.

Indeed, Russia's grain harvest this year is 46.4% done at 72.7 MMT, is the Ag Ministry's figures are to be believed. That includes 51.1 MMT of wheat off 50% of the harvestable area. The official Ministry forecasts for a grain crop of 110 MMT and a wheat crop of 67 MMT therefore look eminently achievable. Too low some might say.

The Russian Ministry say that grain exports Jul 1 to Aug 10 were up 13% versus the same period in 2015 at 2.943 MMT. Wheat consisted of 2.348 MMT of that compared to 1.662 MMT a year ago.

Russian seaports shipped out 725.6 TMT of wheat grain week, up from 411.2 TMT the previous week, say APK Inform. That total included 634.4 TMT of wheat.

Ukraine's seaports were down a tad week-on-week at 660.1 TMT, including 413.1 TMT of wheat, but were still substantial nevertheless.

Morocco are tendering for 68 TMT of feed barley and Syria are in the market for 1 MMT of Russian wheat.



13 August 2016 | EU Reports
12/08/16 -- EU grains finished lower on the day and mixed for the week. London wheat consolidated from a more than one-year high hit yesterday, although sterling weakness continued today.

The day ended with Nov 16 London down GBP0.65/tonne at GBP130.75/tonne, Sep 16 Paris wheat was EUR3.25/tonne lower at EUR164.50/tonne, Aug corn was down EUR1.25/tonne at EUR165.25/tonne and Nov 16 rapeseed was down EUR0.25/tonne to EUR369.50/tonne.

For the week London wheat was still GBP3.75/tonne firmer, Paris wheat was down EUR2.00/tonne, corn was up EUR0.25/tonne and rapeseed added EUR3.25/tonne.

The pound closed around 1.1550 against the euro - a level last seen in August 2013. It also now sits comfortably below the 1.30 level against the US dollar.

The UK winter barley harvest is now 90% done with yields averaging 5.9-6.3 MT/ha, say the HGCA. That's 7-13% below the 5-year average of 6.8 MT/ha.

Winter OSR is 80% harvested with yields coming in around 3.0-3.2 MT/ha, some 12-17% below the 5-year average of 3.6 MT/ha, they add.

Only around 5% of the winter wheat has been cut, and it's therefore too early to call yields reliably this year. However what has been cut is turning in some better ones than expected. "In the Eastern region and South East, early yields were 10% above the farm average, with farm yields typically between 8.7-8.9 MT/ha. Whilst farm yields are close to average in Yorkshire and Humber, West Midlands and South West, typically yielding between 7.3-8.0 MT/ha. In the East Midlands, the earliest yields were slightly below the farm average," they said.

It would seem thus far then that UK wheat yields may not be suffering as badly as some other crops this year, we will need a bit more time for clarification of this though.

EU soft wheat export licences came in at 450 TMT this week, with the cumulative season-to-date total 2.2 MMT versus 2.3 MMT this time a year ago.

FranceAgriMer said that the French wheat harvest is 76% done versus 62% a week ago and 95% complete this time last year. Spring barley is 78% harvested versus 47% last week and 97% a year ago. They said that 96% of the French corn crop is now silking as opposed to 83% last week and 100% a year ago.

French wheat crop conditions were cut another 2 points in the good to very good rating to just 33% (77% a year ago).

Strategie Grains said that only 79% of this year's French wheat crop will make milling standard as opposed to 88% a year ago. Across Europe it's 66% versus 71% a year ago.

Jordan issued a new 100 TMT feed barley tender. Saudi Arabia issued a tender to buy 600 TMT of hard wheat for Oct/Dec shipment.



12 August 2016 | EU Reports
11/08/16 -- EU grains closed mostly firmer, with London wheat marching on to new highs.

The day ended with benchmark Nov 16 GBP1.40/tonne higher at GBP131.40/tonne. Sep 16 Paris wheat traded up EUR1.00/tonne at EUR167.75/tonne, Aug corn was EUR1.00/tonne higher at EUR167.00/tonne and Nov 16 Paris rapeseed was EUR0.25/tonne lower at EUR369.75/tonne.

Nov 16 London wheat closed at the highest level for a front month since Jul 9, 2015, and new crop Nov 17 closed at it's best levels since last October.

The pound finishing at it's worst levels against the euro since Aug 2013 was certainly a contributory factor, as well as the constant downgrading of the French crop and a bleak outlook for 2016/17 wheat exports from them.

The weak sterling, triggered by the Brexit vote, helped UK wheat and barley exports in 2015/16 exceed Defra expectations, noted the HGCA.

This was due to a late surge in sales - wheat exports in June were 276 TMT, a 19-year high for the month, and barley exports were 105 TMT.

Total season shipments finished up at 1.99 MMT for barley and 2.85 MMT for wheat, according to Defra.

Sticking with them, they said that the English wheat planted area for the 2016 harvest was 1.699 million ha, slightly above the 1.693 harvested in 2015. Barley area jumped from 748k ha to 798k ha. The rapeseed area fell more than 10% to 546k ha.

In Europe, Strategie Grains cut their latest estimate for the soft wheat crop by 7.7 MMT to 137.9 MMT, mainly due to losses in France where production was pegged at 29.9 MMT, down 6.0 MMT from last month and 11.1 MMT on last year.

They also took a serious slice off their prediction for EU soft wheat exports in 2016/17, down 4.3 MMT to 24.7 MMT.

Separately CRM AgriCommodities pegged French production at 28-29 MMT, and the German crop at 22.5-23.0 MMT.

For the UK where the harvest is only just getting going, CRM go 14.5-14.7 MMT, with Strategie Grains slightly higher at 14.8 MMT.




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