The day ended with May 15 London wheat up GBP1.50/tonne at GBP111.20/tonne,
Sep 15 Paris wheat jumped EUR4.50/tonne higher to EUR185.00/tonne, Jun 15 Paris
corn gained EUR0.50/tonne to EUR154.50/tonne whilst Aug 15 Paris rapeseed was
down EUR0.25/tonne to close at EUR359.50/tonne.
"The leading wheat district in the Texas panhandle has received 6.8 inches
of rainfall in the past few weeks, more than 3 times the average," said
Martell Crop Projections.
There's now up to 10 inches of further rainfall in the forecast for the Texas/Oklahoma
border area across the next 7 days, according to a report on Agrimoney.
At home, the pound closed above 1.40 against the euro - a feat it has only
managed to achieve a handful of times since late 2007.
Barclays altered their forecasts for the outlook of sterling, although maintaining
their view that it will go in opposite directions against the US dollar and
the single currency over the next 12 months.
Against the euro they now see the pound hitting 1.43 in the next quarter of
2015 (up from a previous forecast of only 1.38), before appreciating further
to 1.45 in Q4 and 1.47 in Q1 of 2016.
The UK currency will however fall to 1.43 versus the US dollar in Q3 of this
year (although that's better than a previous forecast of 1.39), followed by
1.42 in Q4 and 1.40 in Q1 of 2016.
If true, then this would obviously favour French wheat prices more than those
in the UK, although both would likely fare better than those in the US, who's
exports are already struggling.
Concerns remain over the fortunes of Russian wheat too, with hot and dry weather
in the forecast there and spring wheat planting less than halfway done.
Lanworth don't appear to share those concerns though, estimating the Russian
wheat crop at 60.7 MMT today - far higher than anything else in the ring. The
USDA are currently only at 53.5 MMT, and some other analysts are lower than
Lanworth are also more bullish on wheat production prospects in Canada (31.2
MMT versus the USDA's 29.0 MMT) and Ukraine (23.2 MMT versus 22.0 MMT), although
their view is a bit lower on Europe (150 MMT versus 150.3 MMT).
Separately, MDA CropCast cut their forecast for the world wheat crop by 1.37
MMT from a week ago to 712.3 MMT, due to El Nino related losses in China.
A Bloomberg survey of 34 traders and analysts in the US, Europe and Asia found
17 to be bullish on wheat prices, 11 bearish and 6 neutral.
Fresh news of any great note was thin on the ground. Many traders are keeping
an eye on developments in Russia, where spring plantings are behind schedule
and hot and dry weather is in the 7-14 day forecast.
Agritel said that by Jun 1 temperatures could hit "around 30°C in
Ukraine and middle of Russia and over 30° in Southern Russia." These
would be record levels for so early in the year, they say. Rainfall is also
in line to be below normal in the southern, central and Volga regions of Russia
along with eastern parts of Ukraine, according to the latest forecasts.
Undeterred, the new Russian Agriculture Minister Alexander Tkachev is standing
by his estimate for a 2015 grain crop of 100 MMT. That's only down a little
on the 105.3 MMT produced last season, although he did add the caveat "provided
funding isn’t cut" to his forecast.
Russian business daily newspaper Vermosti says that the Russian Agriculture
Bank has asked the state for an additional 35 billion roubles (around $700 million)
to provide loans to help fund spring planting. The newspaper story suggests
than only 5 billion roubles of this extra funding is likely to be forthcoming
from the government.
Spring grains in Russia have officially been planted on 18.8 million ha so
far, down from 21.1 million this time a year ago. That's a little over 60% of
the Ag Ministry forecast, and includes 6.0 million ha of wheat (45.7% of forecast),
6.1 million ha of barley (74.9%) and 2.3 million ha of corn (83.7%).
The Russian government intervention fund picked up a little under 14,000 MT
of grain in today's purchase round, taking the total bought so far to around
910 TMT. Most of that was so-called grade 3 wheat at RUB9,925/tonne, which is
the equivalent of around $199/tonne. New crop 12.5% Russian milling wheat is
said to be offered around the $180-185/tonne region FOB the Black Sea.
The Russian Ministry said that the country's May 1 grain reserves stood at
19.1 MMT, a 21% increase on a year previously.
In Ukraine, their Ag Ministry are as similarly bullish on 2015 crop production
prospects as their Russian "friends" this year, raising their estimate
for total grain production by 2 MMT to 60 MMT, which again isn't down too much
on last year's output of 63.8 MMT. Wheat will account for 21 MMT of that total,
they say, up 1 MMT from their previous forecast. Winter crop development is
around 3-5 days ahead of normal development, they say.
They say that the country has now exported 30.8 MMT of grains this season,
including 15.9 MMT of corn, 10.3 MMT of wheat and 4.4 MMT of barley. The Ministry
of Economic Development forecast full season Ukraine grain exports at 36.76
MMT, including 20 MMT of corn, 11.6 MMT of wheat and 4.4 MMT of barley.
Ukraine farmers have planted 6.5 million ha of spring grains, out of a government
forecast of 7.0 million, they added. That total includes 4.1 million ha of corn,
Bulgaria said that they'd exported 6.36 MMT of grains this season (to May 1),
including 2.88 MMT of wheat, 1.74 MMT of corn and 0.55 MMT of barley.
Algeria tendered for 50,000 MT of optional origin wheat for August shipment.
At the finish, May 15 London wheat was down GBP1.30/tonne at GBP110.05/tonne,
Sep 15 Paris wheat ended EUR1.75/tonne lower at EUR178.25/tonne, Jun 15 Paris
corn fell EUR0.50/tonne to EUR154.75/tonne whilst Aug 15 Paris rapeseed rose
EUR2.00/tonne to close at EUR357.75/tonne.
The pound was under pressure on news that UK CPI inflation had slipped below
zero for the first time on record. The euro however fared even worse on ideas
that the ECB might be forced to increase QE in the near future.
FranceAgriMer raised their forecast for French soft wheat plantings to 5.17
million ha, up 3.3% from 5.01 million ha a year ago. That's now more or less
in line with the French Ag Ministry's figure of 5.18 million ha, which is the
largest since 1936.
FranceAgriMer estimated the French winter barley area at 1.28 million ha, up
4.3%, some of that increase came at the expense of spring barley plantings which
were pegged 11% lower at 467k ha this year. That's an all barley area of 1.75
million ha versus an Ag Ministry figure of 1.71 million ha.
French corn plantings were estimated down 6.4% at 1.64 million ha by FranceAgriMer,
a little lower than the Ministry's figure of 1.71 million. The former also put
rapeseed sowings 1.9% lower this year at 1.48 million ha.
The German Stats Office meanwhile forecast winter wheat plantings there up
3% at 3.25 million ha, with the German winter barley area also up 3% at 1.27
million ha. Winter rapeseed plantings there are down 6.4% at 1.3 million ha,
Germany's DRV meanwhile forecast the country's winter wheat crop at 27.78 MMT,
up more than 1 MMT from a month ago due to "continued cool and rainy weather".
German barley production was estimated down 5.4% at 10.94 MMT, with winter rapeseed
output falling 16% to 5.23 MMT, and the 2015 German corn crop is seen 6.1% lower
at 4.83 MMT.
Agritel forecast the Ukraine barley crop at 6.9 MMT, down almost 27% on 9.4
MMT a year ago, although above the USDA's recent 6.2 MMT prediction. They see
OSR output there at 1.8 MMT, a more than 14% drop on a year ago and a little
below the USDA's estimate of 2.0 MMT.
UkrAgroConsult estimated Ukraine's 2015 wheat crop at 22 MMT, up 1 MMT from
previously on recent beneficial rains. That's now only 0.5 MMT below last year's
production. Wheat exports in 2015/16 were pegged at 12 MMT, up from their previous
forecast of 10.8 MMT. Exports this season currently stand at 10.2 MMT, and might
reach close to 11 MMT by the end of the campaign.
Spring planting progress in Russia remains behind schedule, with 18.2 million
ha sown so far, according to the Ag Ministry there. That's 58.6% of the government
forecast and 2.3 million ha less than this time last year.
Russian spring wheat is 42.3% sown on 5.6 million ha (versus 6.7 million ha
a year ago), spring barley is 73.6% sown on 6.0 million ha (7.0 million a year
ago) and corn planting is 82.1% done on 2.3 million ha (versus 2.2 million a
year ago), they say.
Agritel forecast the Russian 2015 barley crop at 16.4 MMT, a 12.8% decline
on 18.8 MMT a year ago, and slightly below the USDA's 16.5 MMT estimate.
The day ended with May 15 London wheat up GBP3.25/tonne at GBP111.35/tonne,
Sep 15 Paris wheat jumped EUR5.50/tonne higher to EUR180.00/tonne, Jun 15 Paris
corn gained EUR0.75/tonne to EUR155.25/tonne whilst Aug 15 Paris rapeseed was
up EUR2.00/tonne to close at EUR355.75/tonne.
Fears that heavy and untimely rains on the US Southern Plains - linked to the
developing El Nino - could be causing some crop damage, was one reason for the
rally. That got the heavily short fund money spooked. "At least 4 inches
but 6-8 inches of rain, locally, developed in Texas, Oklahoma and southern Kansas
the past 2 weeks This amounts to s 5-6 times the normal rainfall in an area
known for its dry climate.
Talk that Russia could be in for a hot and dry spell not too far down the line
has also ruffled a few feathers. Spring planting there is only 55% complete
on 17.1 million ha, which is 1.9 million ha less than a year ago.
Showing signs of nerves that all was not going as well as hoped for, the new
Russian Ag Minister has said that regional authorities should make every effort
to increase the pace of spring planting - in particular Siberia and the North
West Federal District.
Rainfall is likely to be sparse for wheat in the former Soviet Union in next
10 days, according to the Commodity Weather Group. Moisture stress could start
to build in Southern Russia by the end of the month, although Ukraine may get
some rain next week, they add.
Meanwhile "there are growing indications of a significant warm-up that
is going to take place over the Volga and Southern districts of western and
central Russia over the next 2-5 weeks," said WxRisk.com.
The Russian Ag Ministry said that the nation's wheat exports were down 60%
from a year ago at 1.61 MMT since the Feb 1 wheat export duty came into force.
Even so, season to date exports of wheat are still up 16% at 20.08 MMT. The
market is expecting that this figure could be 21.0-21.5 MMT by the end of the
Spanish analysts AgroInfoMarket trimmed their forecast for the country's soft
wheat crop from 6.19 MMT to 5.75 MMT, although that's still up 2.9% on output
of 5.59 MMT a year ago. They also reduced their forecast for Spanish barley
production by almost a million tonnes, down from 8.34 MMT to 7.39 MMT, although
again that's better than the 6.74 MMT produced in 2014.
Adverse weather conditions in recent weeks was the reason given for the production
cuts, and they said that further damage could be caused if the current heatwave
persists. Temperatures topped 40C in many parts of Spain last week, breaking
records for the month.
State broadcaster TVE said some estimates calculated agricultural losses could
exceed 50 million euros due to the scorching heat.
For now though, AgroInfoMarket left their estimate for Spanish soft wheat imports
unchanged from last month at 3.31 MMT, but they raised their view on corn imports
by 200 TMT to 5.95 MMT and doubled their estimate for barley imports to 500
The USDA's FAS in Saudi Arabia estimated the country's 2015/16 barley imports
to fall slightly, down 200 TMT to 6.8 MMT, with the nation importing more wheat
and corn. Wheat imports are seen rising 300 TMT to 3.8 MMT and corn imports
expected to increase 1 MMT to 4.45 MMT.
The stronger US dollar was a supportive factor for both London and Paris wheat
today. Barclays forecast the US currency beating sterling down to 1.39 in Q3
of 2015, and 1.36 by Q1 of next year. The euro meanwhile will dip to parity
in Q3 and below it to 0.98 versus the dollar by the end of the year, they predict.
Both events would be friendly for exports, and potentially grain prices here
in Europe, if they are correct.
The day ended with May 15 London wheat down GBP0.35/tonne at GBP108.10/tonne,
Sep 15 Paris wheat was EUR1.50/tonne lower at EUR174.50/tonne, Jun 15 Paris
corn was down EUR0.50/tonne at EUR154.50/tonne and Aug 15 Paris rapeseed fell
EUR0.75/tonne to EUR353.75/tonne.
It's been quite a lively week, but ultimately one that ends with prices little
different to where they were this time last Friday. For the week London wheat
was GBP0.15/tonne higher, with Paris wheat gaining EUR1.25/tonne, corn lost
EUR0.25/tonne and rapeseed was EUR0.50/tonne lower.
The old crop/new crop London wheat spread widened to GBP11.90/tonne versus
GBP11.10/tonne a week ago and GBP8.35/tonne on the first of the month.
The pound finished the week little changed versus the euro, and up around 3
cents against the US dollar.
As was fairly widely anticipated, Russia today abolished the minimum EUR35/tonne
export duty on wheat. That might allow a further 1-2 MMT to come onto the export
market between now and the end of the season, depending on who's estimate you
The statement that accompanied the announcement said that the move would provide
Russian agricultural producers with additional funds to carry out their spring
sowing campaign. It's probably more likely though that Russian shippers already
have much, if not all, of this wheat on hand already, so Russian growers might
not get much in the way of financial benefit from the move.
There are reports now that domestic Russian prices have fallen so low that
it is more profitable (or less loss-making) to sell to the government intervention
fund than to shippers looking to export.
Russian spring grain planting is said by the Ag Ministry to be 45% complete
on 14 million ha, which is 2.2 million ha less than this time a year ago. Progress
is slowest in the Far Eastern region (20% sown), Siberia (17% complete) and
the Urals (7% done).
Nationally only 25% of the Russian 2015 spring wheat crop has been sown so
far. Spring barley and corn planting is around two thirds done.
APK Inform forecast Russia's 2014/15 barley exports at almost 5.5 MMT - a new
record and more than double those of last season.
They also raised their estimate for total 2014/15 Ukraine grain exports to
34.8 MMT, a 8.9% rise on last season and a record volume. That includes 19 MMT
of corn (down 3.9% on last season), 11 MMT of wheat (up 17.7%) and 4.38 MMT
of barley (up 77%).
The Ukraine Ag Ministry said that the country had exported 30.22 MMT of grains
so far this season, including 15.4 MMT of corn, 10.21 MMT of wheat and 4.38
MMT of barley.
Essentially then APK Inform seem to believe that barley exports are finished,
and that there's less than 800 TMT of wheat to ship between now and the remainder
of the season.
The Ukraine state statistics service said that the country's grain stocks as
at My 1 were 22% higher than a year ago at 12.9 MMT, including 6.8 MMT of corn,
4.6 MMT of wheat and 1 MMT of barley.
Closer to home, FranceAgriMer said that the French corn crop was now 92% planted
as of Monday, up 10 points in a week and 4 points ahead of this time last year.
French winter wheat is 26% headed, up from 7% a week ago but 10 points behind
last year. Winter barley is 96% headed versus 70% a week ago and 98% a year
ago. They said that 36% of the spring barley crop was at the 2-node stage versus
11% a week ago and 17% this time last year.
They estimate 91% of the French winter wheat crop to be in good to very good
condition, up one point on a week ago and versus only 74% a year ago. Winter
barley ratings also improved one point to 90% good to very good versus 73% a
year ago. Spring barley was rated 95% good to very good and corn was pegged
at 91% good to very good.
Bloomberg report that temperatures are seen as much as 3C below normal for
the UK, France, Benelux and Germany next week.
The leading French grain hub of Rouen exported less than 70,000 MT of grains
in the week through to May 13 - the lowest volume since the holiday shortened
last week in December. The volume included 38,000 MT of feed barley to China,
26,000 MT of wheat for Spain and 1,750 MT of wheat destined for the UK.
Defra reported that UK wheat stocks (excluding on farm stocks in Scotland and
Northern Ireland) were up 49% year-on-year as at the end of February at 6.4
MMT. Barley stocks were up 21% at 2.2 MMT. Both stock levels were the highest
since at least 2008, and the wheat figure means that almost 39% of last year's
production is still here unused.
They said that 68% of total UK grain stocks were still being held on farm.
At the finish, May 15 London wheat was up GBP2.80/tonne at GBP108.45/tonne,
Sep 15 Paris wheat ended EUR5.00/tonne higher at EUR176.00, Jun 15 Paris corn
rose EUR1.00/tonne to EUR155.00/tonne whilst Aug 15 Paris rapeseed fell EUR1.25/tonne
to close at EUR354.50/tonne.
US wheat markets were sharply higher as fund money got spooked into covering
in some of their massive short position with Chicago wheat posting its largest
one day gain in three years, according to Benson Quinn.
That was probably down to a combination of factors: the strengthening El Nino,
excessive wetness suddenly pounding US winter wheat on the Plains just before
the harvest begins, there was even talk today of a hot/dry pattern beginning
to emerge in Russia.
The latter would be a particularly interesting development, should it transpire.
Spring planting in Russia is only 42.3% done so far on 13.1 million ha, which
is 1.8 million ha less than this time last year. Spring wheat is only 22.3%
Weather models that I am looking at do indeed forecast temperatures to be well
above normal in the 8-15 day time frame. However, most of the country, apart
from the Southern Region, is also forecast to get above average rainfall across
the coming 15 days. Watch this space for developments on that story...
The Russian Ag Ministry are predictably keen to keep a bullish spin on things.
They've reduced their estimate for the total winter grains are that suffered
from winter kill from 1.8 million ha to 1.3 million, or 7.8% of the total planted
area. That's about a "normal" percentage.
They maintained their forecast for grain production in 2015 at a nice round
100 MMT. Not everyone is quite so optimistic, the USDA were at 90.8 MMT this
week, including 53.5 MMT of wheat.
MDA CropCast today trimmed their forecast for Russia's wheat crop this year
by 1.1 MMT to 52.8 MMT. They also lopped 1.4 MMT off their estimate for wheat
production in Ukraine, bringing their figure down to 21.6 MMT versus the USDA's
22.0 MMT prediction.
Incidentally, in addition they pared back their outlook on both the Russian
and Ukraine barley crops too, reducing those by 1.8 MMT and 2.1 MMT respectively
to 16.7 MMT and 6.5 MMT. The USDA are even lower at 16.5 MMT and 6.2 MMT, a
drop of 18% and 34% on production last year.
In other news, Brussels announced that they'd issued 477 TMT worth of soft
wheat export licences this past week, taking the season to date total to over
28.4 MMT with 7 weeks of the campaign remaining. Add on wheat flour and durum
wheat exports too and the "all wheat" total is over 30 MMT. Barley
exports are now past 8 MMT, and those for corn have almost reached 3 MMT.
Note that in all of the past 5 seasons total exports of soft wheat have exceeded
the total volume of licences issued, according to the HGCA.
Strategie Grains today increased their forecast for total EU soft wheat exports
in 2014/15 to 32.2 MMT. Things don't look quite so promising for 2015/16 however,
they reduced their estimate for exports there by 2.6 MMT to 28.6 MMT. Carryout
at the end of next season was raised by 1.6 MMT to 17.5 MMT, which is far higher
than the 14 MMT predicted by the USDA on Tuesday.
The anticipated imminent end to the hefty export duty on Russian wheat could
mean another 1.9 MMT of the grain being exported between now and the end of
the season, according to Rusagrotrans. That would hike Russia's 2014/15 total
wheat exports to around 22 MMT.
The day ended with May 15 London wheat down GBP1.70/tonne at GBP105.65/tonne
(a new 5-year low for a front month), Sep 15 Paris wheat stumbled EUR2.50/tonne
lower to EUR171.00/tonne, Jun 15 Paris corn fell EUR1.00/tonne to EUR154.00/tonne
whilst Aug 15 Paris rapeseed was down EUR0.50/tonne to close at EUR355.75/tonne.
The pound rose above 1.57 against the US dollar for a five month high, it also
bobbed above (but didn't close at) 1.40 versus the euro - a level it has flirted
with recently, but hasn't spent any prolonged time above since late 2007.
Now that the election issue has been settled there seems to be a bit more confidence
about regarding the UK economic outlook.
News that UK unemployment fell to 5.5% in Q1 of 2015, down from 5.7% in the
last quarter of 2014 and a bit below the 5.6% that most analysts were forecasting,
was friendly for sterling. The ONS said that UK employment, at 73.5%, is at
the highest levels since records began in 1971.
You will recall of course that UK wheat exports Jul/Mar were only 1.58 MMT
out of the Defra estimate of an exportable surplus/free stock figure of almost
3.9 MMT. Sterling strength won't do anything to help that pace step up a gear,
so it looks like we are stuck with a much larger carryover into the new 2015/16
season than we are used to.
Now that some decent rains have arrived, UK crop conditions are looking pretty
good. We might not have a record wheat crop in 2015, but we should have a decent
one as things stand, and the unusually large volume getting carried into the
new season will make all that a challenge to move.
The last thing you want under these circumstances is a strong currency and
the prospect of record production from our "noisy neighbours" across
the channel - France.
The French Ag Ministry have fine-tuned their planted area estimates, pegging
soft wheat plantings at 5.18 million hectares - the highest since 1936 and up
3.3% from a year ago. They haven't yet put a figure on actual production, but
with FranceAgriMer telling us that 90% of the crop is in good to very good condition,
the potential has to be there for this to be a record production year over there.
You may remember that ODA recently raised their French soft wheat yield forecast
to 7.65 MT/ha, if that's correct then we are looking at a French soft wheat
crop of over 39.6 MMT. That's up more than 2 MMT on last year and well above
the average trade estimate of 38.1 MMT in a recent Bloomberg survey.
Recent rains will have helped the crop considerably, which is also the case
in Germany and Poland which had been suffering from a relatively dry winter
and beginning to spring.
Russia remains a wild card. They are expected to remove the export tax on wheat
any day now, and shipments could therefore pick up considerably for the last
couple of months of the season.
There's still a question mark over 2015 production prospects however. Currently
less than 40% of the official government estimate for spring planting has been
completed, with wheat planting less than 20% done.
The USDA yesterday estimated Russian wheat yields to be down 14% this year
(although last year was a record, so potential this year essentially matches
that of the 5-year average, they say).
Russian-based agronomist Mike Lee however thinks that yields potential this
year could be down significantly more than that given all the problems growers
there face this year - lack of credit, sky-high input costs etc.
Not to be outdone in insisting that everything is all right, the Ukraine Ag
Minister said today that yesterday's USDA forecast for grain production there
this year (wheat 22 MMT, corn 26 MMT and barley 6.2 MMT) is too low, without
putting a figure on it himself.
Developments in these two countries would appear to be the bull's best hope
for any sort of significant improvement in prices this year. Only time will
tell if they get it.
The day ended with May 15 London wheat up GBP0.50/tonne at GBP107.35/tonne,
Sep 15 Paris wheat was unchanged at EUR173.50/tonne, Jun 15 Paris corn was down
EUR1.25/tonne at EUR155.00/tonne and Aug 15 Paris rapeseed was down EUR2.75/tonne
It was a big day in terms of news, with the USDA giving us their first take
of the season on crop production and demand prospects for the year that lies
Before we move onto that though, it is worth noting that they increased the
size of EU wheat exports in the current 2014/15 season by 1 MMT to a new record
34.5 MMT. That helped to cut ending stocks here from the previously forecast
15.3 MMT to 14.7 MMT. Also of note with regards to the current season were increases
in exports for Russia, up from 20 MMT to 21.5 MMT, and Ukraine, up from 11 MMT
to 11.5 MMT. Argentina and the US had their export potential pared back by 0.5
MMT and 0.8 MMT respectively.
Looking ahead, world 2015/16 wheat production was forecast down from last year’s
record, but still above consumption for the third straight year. They see output
in the season ahead at 718.9 MMT, down 1% from 726.5 MMT a year ago, with consumption
rising to 716.6 MMT.
They see production in Europe down 4% at 150.3 MMT this year, with exports
falling 2 MMT to 32.5 MMT and ending stocks falling a little to 14.0 MMT in
Russia's wheat crop is forecast at 53.5 MMT this year, down 9.5% on a year
ago. Following poor establishment after a dry autumn, "winter crops benefited
from generous April precipitation, and early May satellite imagery reflect substantial
improvement in many territories in the Central District and Volga Valley. Potential
yields will depend in large part on May and June weather. Winter wheat accounts
for about two-thirds of Russia’s total wheat output," they said.
"Sharp increases in the prices of fertilizer and imported agrochemicals
will induce some farmers to reduce fertilizer application rates and switch to
cheaper but less effective domestic chemicals. Many enterprises, however, enjoyed
high profits from last year’s bumper harvest, which enabled them to purchase
inputs last fall. Most independent commodity analysts do not envision a large
year-to-year drop in the use of these materials," they added.
They forecast wheat production in Ukraine this year down 11% at 22 MMT.
In the 2015/16 season, their first estimate for Russia's wheat exports is 1.5
MMT less than this marketing year at 20 MMT. Ukraine's exports will drop 1 MMT
to 10.5 MMT, they predict.
The EU-28 corn crop will drop more than 7% to 68.3 MMT, and imports of the
grain in 2015/16 will therefore jump 50% from 8 MMT to 12 MMT, they said.
As far as barley is concerned, EU-28 exports for the current season were raised
1 MMT to 8.5 MMT, but will fall to 7.5 MMT in 2015/16. Production here this
year will decline 2.5% to 58.7 MMT, they estimate.
Rapeseed production in Europe will fall nearly 11% to 21.6 MMT, they added.
Separately, Oil World today raised their outlook on rapeseed production in the
EU this year to 22 MMT. This 21.5 to 22 MMT is the region where most analysts
are now lining up.
At home, the pound hit its best levels against the US dollar since November.
Although the BoE appear to be under little pressure to raise interest rates
any time soon, there's a school of thought that suggests that the recent Tory
election victory, without the need to form a coalition, offers the stability
that affords them the option to do so possibly a bit sooner than expected.
That won't help wheat UK exports any. These fell to 237 TMT in March, down
11% compared to February which was also of course also a shorter month. Season
to date exports are 1.58 MMT out of the Defra estimate of an exportable surplus/free
stock figure of almost 3.9 MMT in a season with only 3 months left to go. It
is also worth noting that wheat imports in March increased to 128 TMT, and that
season to date imports aren't much less than exports at 1.27 MMT.
UK barley exports in March were 183 TMT, taking the season to date total to
1.16 MMT - said to be the highest at that stage in a season in 15 years by the
At the finish, May 15 London wheat was down GBP1.10/tonne at GBP106.85/tonne,
Sep 15 Paris wheat ended up EUR0.25/tonne at EUR173.50, Jun 15 Paris corn rose
EUR1.50/tonne to EUR156.25/tonne whilst Aug 15 Paris rapeseed jumped EUR4.75/tonne
to close at EUR359.00/tonne.
London wheat has now taken out the September lows and closed at the lowest
level on a front month in almost 5 years.
Large carryover stocks at the end of the 2014/15 season, and the prospect for
increased wheat production in the US and Canada, along with a decent crop in
Europe (and quite possibly a record large one in France) are creating a bearish
Prospects in Russia and Ukraine currently (and more importantly officially)
don't look as bad as many feared back in the winter either, with production
estimates down but not drastically so. For now at least, the market also seems
fairly relaxed about the slow spring planting pace in both of these "pile
it high and sell it cheap" countries. The imminent removal of the Russian
export duty on wheat is another bearish factor.
ProZerno estimated Russia's 2014 wheat crop at 59.1 MMT, falling 7.8% to 54.4
MMT in 2015. They actually forecast an increase in the planted area of 3.5%
to 25.9 million ha, but see yields dropping from 2.5 MT/ha to 2.24 MT/ha.
They see the sharp drop off in Russian exports since the duty was introduced
though meaning that carryover stocks of a record 8.1 MMT will lift the total
wheat supply in Russia to 62.5 MMT in 2015/16 - which is exactly the same volume
available in 2014/15 whent wheat stocks a year ago to carry into this season
were substantially less. Russia's wheat consumption needs in 2014/15 are pegged
at 34.3 MMT, a similar requirement next season would leave 28.2 MMT of wheat
left over for export and/or carryover stocks.
Russia's wheat exports so far this season stand at around the 20 MMT mark.
Russia's 2015 spring planting campaign hasn't got off to the best of starts
though, with 9.6 million ha sown so far, down from 11.2 million this time last
year. What has been seeded represents 31% of the government estimated area and
includes only 1.6 million ha of wheat, or 12.1% of "plan".
Meanwhile, spring grain planting in Ukraine is 78% done on 5.5 million ha,
according to their Ag Ministry. This time last year spring plantings were said
to be completed on 6.7 million ha, so they're currently 18% behind last year's
Switching back to Europe, Swiss-based barley traders Evergrain said that spring
barley crop prospects in France were excellent helped by recent rains, and raised
their yield forecast to 6.7 MT/ha versus the 3-year average of 6.5 MT/ha.
They also increased their yield estimates for Germany, England, Denmark and
the Czech Republic to levels which are essentially broadly in line with the
Meanwhile the humiliation of the May 15 Paris wheat contract pales into insignificance
the combined suffering of Ed Milliband, Ed Balls and Nick Clegg today.
The day ended with May 15 London wheat down GBP1.40/tonne at GBP107.90/tonne,
May 15 Paris wheat crashed another EUR5.50/tonne lower to EUR156.00/tonne, Jun
15 Paris corn fell EUR0.50/tonne to EUR154.75/tonne whilst Aug 15 Paris rapeseed
added EUR2.25/tonne to close at EUR354.25/tonne.
For the week that puts London wheat GBP3.90/tonne weaker, and within pennies
of the lowest close on a front month since the summer of 2010.
If you think that's bad, spare a thought for those long-holders of May 15 Paris
wheat. That's suffered a whopping EUR22/tonne loss in the past week, with EUR15/tonne
of that coming in the past two sessions alone. We haven't seen a capitulation
of that magnitude in a single week for many moons - and possibly ever - in the
case of Paris wheat.
The May 15 contract goes off the board on Monday, so at least its pain will
be over soon. Paris corn closed the week EUR1.25/tonne higher than it began
it, and Paris rapeseed finished the week exactly even.
The spread between old crop May 15 and new crop Nov 15 has now widened to GBP11.10/tonne
from GBP8.35/tonne a week ago in the case of London wheat. Interestingly, there's
a further GBP9.00/tonne, or 7.6%, on offer to carry your new crop wheat (and
even your old crop too!) all the way into Nov 16.
The premium on Dec 16 Paris wheat over the Dec 15 position is EUR10/tonne,
or 5.7%, and the Jul 16 Chicago wheat contract is tonight paying 11.3% more
than the Jul 15 position.
FranceAgriMer cut their good to very good rating on the French winter wheat
crop by one point to 90%, but that's still far higher than 74% this time last
year. Winter barley ratings also fell one point to 89% versus 73% a year ago.
Spring barley ratings rose one point in the good to very good category to 96%.
Corn planting was estimated at 82% done, up 7 points in a week and 4 ahead
of this time last year. They said that 7% of the winter wheat crop is now at
the heading stage, up from only 1% a week ago but down from 14% this time a
The market is now looking to the fairly imminent arrival of new crop wheat,
whilst glancing over it's shoulder at the large volume of old crop still being
There's evidence that old crop exports are finally slowing down (on an EU-basis
at least - UK exports never really got going at all). Brussels only issued 273
TMT worth of soft wheat export licences this past week, down from 587 TMT the
previous week. Still, season to date exports now stand at 28 MMT, up 11% versus
25.2 MMT a year ago.
Russia's spring planting campaign is now 31% complete on 9.6 million hectares,
that's 14% less than the 11.2 million ha that had been sown this time last year.
Spring wheat planting is only 12% done, although more than half of the spring
barley and corn crops have now been sown.
Rusagrotrans estimated Russia's May grain exports to fall to 0.9-1.2 MMT versus
1.35 MMT in April. A Russian newspaper said the the existing and punitive wheat
export duty will be replaced with one of just a token USD1/tonne starting on
Jul 1, provided that wheat prices remain below RUB12,000/tonne, which is currently
the equivalent of around USD236/tonne. New crop offers for 12.5% Russian milling
wheat are currently well below USD200/tonne.
The market will be looking to see how US farmers have done with their corn
and soybean plantings in Monday night's USDA report (some think that corn planting
could be 75% or even 85% done as of Sunday night versus only 58% complete a
year ago). After that we get the latest WASDE report to chew on on Tuesday.