EU Reports
20-09-2014 10:29 AM | EU Reports
19/09/14 -- EU grains closed lower across the board, with London and Paris wheat sliding to levels not seen since July 2010, and corn to its worst since June of that year.

The day ended with Nov 14 London wheat down GBP1.45/tonne to GBP111.55/tonne, Nov 14 Paris wheat closed EUR5.50/tonne lower at EUR153.50/tonne, Nov 14 Paris corn was down EUR2.75/tonne to EUR137.00/tonne, whilst Nov 14 Paris rapeseed was EUR4.75/tonne easier at EUR318.25/tonne.

For the week that puts Nov 14 London wheat down a relatively modest GBP1.10/tonne compared to the EUR9.25/tonne loss suffered by Nov 14 Paris wheat. Nov 14 Paris corn was down EUR3.25/tonne versus last Friday, whilst Nov 14 Paris rapeseed was EUR2.75/tonne easier.

The pound rose to 1.28 against the euro following the announcement that Scotland had voted 55:45 in favour of staying in the Union, although it gave up all of those gains later in the day, it was still higher for the week.

Paris wheat simply took a pasting, although it's difficult to put a specific reason to why, even if Chicago wheat also crashed to 4-year lows of it's own. Maybe the recent furore over the vague and variable nature of the contract quality requirements had something to do with it. Why should what is little better than feed wheat command such a premium as it recently has? Maybe some are aiming to simply make delivery of lower grade wheat (the supply of which far outstrips demand anywhere else) against the contract - assuming that there is actually some room in the silos of Rouen by then. If there isn't, then nobody really knows what will happen.

A month ago Paris wheat was commanding an EUR21.50/tonne premium to London feed wheat, tonight that differential has fallen to EUR12/tonne.

Or perhaps it was simply the realisation that much of this French wheat simply has to be sold, regardless of what price can be achieved for it (as with this week's GASC tender), to make room for the impending record large corn crop that's about to start coming in?

Late in the afternoon FranceAgriMer said that harvesting of that hadn't started as of Monday. They did however increase the proportion of the crop rated good to very good by one percentage point from a week ago to a large looking 86% versus only 55% this time last year.

There's a similar situation brewing in the States, with words like "phenomenal" and "bewildering" and "stellar" being used to describe early US corn and soybean yields.

The oft asked "how low can it go" question is still doing the rounds. In the case of Chicago corn some are now suggesting that a fall below $3/bu could be on the cards before too long. The next support level for London wheat is GBP110/tonne, and if that breaks then we are then looking at GBP100/tonne.

Meanwhile the 6 week long "sideways" pattern that existed in Paris wheat, as support at EUR170/tonne held, already seems like a distant memory. The market has quickly plunged a further EUR16.50/tonne, almost 10%, since that level was first breached just 10 days ago.

The Russian grain harvest rumbles on, if something that big can rumble. That now stands at 88.6 MMT off 72.6% of plan, with average yields up 17.5% at 2.62 MT/ha. Wheat currently accounts for 53.8 MMT of that total, off 73.2% of plan. Barley adds a further 19.6 MMT, off 85.3%, and corn 2.8 MMT, off 20.7%.

Winter plantings in Russia for the 2015 harvest are already well advanced, at 56.2% complete on 9.3 million hectares, up from only 5.6 million ha a year ago at this time. Note though that has been sown has largely gone into dry seed beds, especially in the Southern District. That sadly is only a very small crumb of comfort to the bulls. The forecast for the region is much wetter than normal across the next 15 days.

Ukraine meanwhile has now harvested 12% of it's planned 2014 corn area, producing a crop of 2.4 MMT to date. If this is marketed in the same desperate manner as they have been doing with wheat, barley and rapeseed (and it probably will be), then that doesn't bode well for prices in the coming months - especially with a record large EU crop also on the way.

The Ukraine Ministry said that the country had exported 7.2 MMT of grain so far this season, including 4.12 MMT of wheat and 2.55 MMT of barley. The latter figure now surpasses the USDA forecast for the entire season after just 2 1/2 months of it.

Brussels said that they'd issued 505 TMT of soft wheat export licences this past week, taking the season to date total to 5.8 MMT. That's 100 TMT more than at this time last year, which is good, even if prices have needed to be cut to get the sales away. Don't forget that the USDA currently expects EU wheat exports to fall more than 18% this year versus 2013/14.

On the flip side of the coin, cumulative EU corn import licences have now been granted for 2.1 MMT, more than double the 911 TMT issued this time last season.

UK customs data released yesterday showed that the UK imported over 194 TMT of wheat and more than 100 TMT of corn in July - the first month of the new marketing year.

20-09-2014 10:19 AM | EU Reports
19/09/14 -- EU grains closed lower across the board, with London and Paris wheat sliding to levels not seem since July 2010, and corn to its worst since June of that year.

The day ended with Nov 14 London wheat down GBP1.45/tonne to GBP111.55/tonne, Nov 14 Paris wheat closed EUR5.50/tonne lower at EUR153.50/tonne, Nov 14 Paris corn was down EUR2.75/tonne to EUR137.00/tonne, whilst Nov 14 Paris rapeseed was EUR4.75/tonne easier at EUR318.25/tonne.

For the week that puts Nov 14 London wheat down a relatively modest GBP1.10/tonne compared to the EUR9.25/tonne loss suffered by Nov 14 Paris, Nov 14 Paris corn was down EUR3.25/tonne versus last Friday, whilst Nov 14 Paris rapeseed was EUR2.75/tonne easier.

The pound rose to 1.28 against the euro following the announcement that Scotland had voted 55:45 in favour of staying in the Union, although gave up all of those gains later in the day.

Paris wheat simply took a pasting, although it's difficult to put a specific reason to why, even if Chicago wheat also crashed to 4-year lows of it's own. Maybe the recent furore over the vague and variable nature of the contract quality requirements had something to do with it. Why should what is little better than feed wheat command such a premium as it recently has? Maybe some are aiming to simply make delivery of lower grade wheat (the supply of which far outstrips demand anywhere else) against the contract - assuming that there is actually some room in the silos of Rouen by then. If there isn't, then nobody really knows what will happen.

A month ago Paris wheat was commanding an EUR21.50/tonne premium to London feed wheat, tonight that differential has fallen to EUR12/tonne.

Or perhaps it was simply the realisation that much of this French wheat simply has to be sold, regardless of what price can be achieved for it (as with this week's GASC tender), to make room for the impending record large corn crop that's about to start coming in?

Late in the afternoon FranceAgriMer said that harvesting of that hadn't started as of Monday. They did however increase the proportion of the crop rated good to very good by one percentage point from a week ago to a large looking 86% versus only 55% this time last year.

There's a similar situation brewing in the States, with word like "phenomenal" and "bewildering" and "stellar" being used to describe early US corn and soybean yields.

The oft asked "how low can it go" question is still doing the rounds. In the case of Chicago corn some are now suggesting that a fall below $3/bu could be on the cards before too long. The next support level for London wheat is GBP110/tonne, and if that breaks then we are then looking at GBP100/tonne.

Meanwhile the 6 week long "sideways" pattern that existed in Paris wheat, as support at EUR170/tonne held, already seems like a distant memory. The market has quickly plunged a further EUR16.50/tonne, almost 10%, since that level was first breached just 10 days ago.

The Russian grain harvest rumbles on, if something that big can rumble. That now stands at 88.6 MMT off 72.6% of plan, with average yields up 17.5% at 2.62 MT/ha. Wheat currently accounts for 53.8 MMT of that total, off 73.2% of plan. Barley adds a further 19.6 MMT, off 85.3%, and corn 2.8 MMT, off 20.7%.

Winter plantings in Russia for the 2015 harvest are already well advanced, at 56.2% complete on 9.3 million hectares, up from only 5.6 million ha a year ago at this time. Note though that has been sown has largely gone into dry seed beds, especially in the Southern District. That sadly is only a very small crumb of comfort to the bulls. The forecast for the region is much wetter than normal across the next 15 days.

Ukraine meanwhile has now harvested 12% of it's planned 2014 corn area, producing a crop of 2.4 MMT to date. If this is marketed in the same desperate manner as they have been doing with wheat, barley and rapeseed (and it probably will be), then that doesn't bode well for prices in the coming months - especially with a record large EU crop also on the way.

The Ukraine Ministry said that the country had exported 7.2 MMT of grain so far this season, including 4.12 MMT of wheat and 2.55 MMT of barley. The latter figure now surpasses the USDA forecast for the entire season after just 2 1/2 months of it.

Brussels said that they'd issued 505 TMT of soft wheat export licences this past week, taking the season to date total to 5.8 MMT. That's 100 TMT more than at this time last year, which is good, even if prices have needed to be cut to get the sales away. Don't forget that the USDA currently expects EU wheat exports to fall more than 18% this year versus 2013/14.

On the flip side of the coin, cumulative EU corn import licences have now been granted for 2.1 MMT, more than double the 911 TMT issued this time last season.

UK customs data released yesterday showed that the UK imported over 194 TMT of wheat and more than 100 TMT of corn in July - the first month of the new marketing year.

19-09-2014 07:09 AM | EU Reports
18/09/14 -- EU grains closed mostly lower, as the old adage "big crops get bigger" continues to bite.

The day ended with Nov 14 London wheat down GBP0.75/tonne to GBP113.00/tonne, Nov 14 Paris wheat closed EUR2.50/tonne lower at EUR159.00/tonne, Nov 14 Paris corn was down EUR0.50/tonne to EUR139.75/tonne, whilst Nov 14 Paris rapeseed was EUR2.75/tonne easier at EUR323.00/tonne.

This was the first time Paris wheat has closed below EUR160/tonne since July 2010.

French analysts Strategie Grains estimated the EU soft wheat crop at 146.6 MMT, up 2.5 MMT from last month, and 8% higher than a year ago. They now put the EU all wheat crop at a record 153.8 MMT versus the USDA's current 151 MMT estimate.

In addition they placed the EU-28 corn crop at an also record 71.3 MMT, up 3.3 MMT on a month ago, and 11% higher than in 2013. This was based on "mostly good conditions at planting time and lack of drought-stress during this year's growth cycle," they said.

For good measure they also increased their outlook for the EU-28 2014 barley crop by 1.9 MMT to 59.6 MMT, a figure now barely changed from 59.7 MMT a year ago, when plantings were boosted by an unusually wet winter.

MDA CropCast joined the chorus of analysts forecasting higher grain production across the world in 2014, upping their estimate for Ukraine's wheat crop by 3 MMT to 23.6 MMT, with an increase also for barley (up 0.9 MMT to 8.7 MMT)

Russia said that its 2014 grain harvest had now reached 88.2 MMT off 72.2% of plan. That includes 53.2 MMT of wheat (off 72.7%), 19.5 MMT of barley (85.1%) and 2.8 MMT of corn (20.3%).

Rusagrotrans said the the country would export 3.8 MMT of grains this month, down from the record 4.66 MMT shipped out in August. They held steady on their 2014/15 grain export total at 32.5 MMT.

The Russian Ministry said that winter plantings for the 2015 grain harvest were already well advanced, at 8.4 million hectares, around 50% of the planned area, and comparing favourably with only 5.3 million ha a year ago at this time.

Customs data shows that the UK imported a rather large 194 TMT of wheat in July, the first month of the new marketing year. That's far more than the 12 TMT exported, and the 26th month in a row that imports have outstripped exports. That may be due to uncertainty over the quality of this year's crop back then, and monthly volumes will presumably decrease as the season progresses.

The pound was higher against both the US dollar and euro today as the chances of Scotland voting "yes" to exiting the Union seemingly diminished. The latest odds from the bookies tonight have a "no" vote at 1/5 favourite. The result is expected early on Friday morning.

Assuming that a "no" vote gets the nod then the pound could be firmer in the coming days. It already topped 1.27 against the euro today, it's best in more than a year. That would obviously be bearish for UK wheat export ambitions and could add a bit more downside to London wheat prices yet.

Defra today reported English wheat plantings for this year's harvest were up nearly 20% from last year at 1.8 million ha. Add on Scotland, Wales and Northern Ireland, and factor in the HGCA's current median forecast for yields at 8.5 MT/ha then we look like having a crop close to 17 MMT on our hands.

19-09-2014 07:09 AM | EU Reports
18/09/14 -- EU grains closed mostly lower, as the old adage "big crops get bigger" continues to bite.

The day ended with Nov 14 London wheat down GBP0.75/tonne to GBP113.00/tonne, Nov 14 Paris wheat closed EUR2.50/tonne lower at EUR159.00/tonne, Nov 14 Paris corn was down EUR0.50/tonne to EUR139.75/tonne, whilst Nov 14 Paris rapeseed was EUR2.75/tonne easier at EUR323.00/tonne.

This was the first time Paris wheat has closed below EUR160/tonne since July 2010.

French analysts Strategie Grains estimated the EU soft wheat crop at 146.6 MMT, up 2.5 MMT from last month, and 8% higher than a year ago. They now put the EU all wheat crop at a record 153.8 MMT versus the USDA's current 151 MMT estimate.

In addition they placed the EU-28 corn crop at an also record 71.3 MMT, up 3.3 MMT on a month ago, and 11% higher than in 2013. This was based on "mostly good conditions at planting time and lack of drought-stress during this year's growth cycle," they said.

For good measure they also increased their outlook for the EU-28 2014 barley crop by 1.9 MMT to 59.6 MMT, a figure now barely changed from 59.7 MMT a year ago, when plantings were boosted by an unusually wet winter.

MDA CropCast joined the chorus of analysts forecasting higher grain production across the world in 2014, upping their estimate for Ukraine's wheat crop by 3 MMT to 23.6 MMT, with an increase also for barley (up 0.9 MMT to 8.7 MMT)

Russia said that its 2014 grain harvest had now reached 88.2 MMT off 72.2% of plan. That includes 53.2 MMT of wheat (off 72.7%), 19.5 MMT of barley (85.1%) and 2.8 MMT of corn (20.3%).

Rusagrotrans said the the country would export 3.8 MMT of grains this month, down from the record 4.66 MMT shipped out in August. They held steady on their 2014/15 grain export total at 32.5 MMT.

The Russian Ministry said that winter plantings for the 2015 grain harvest were already well advanced, at 8.4 million hectares, around 50% of the planned area, and comparing favourably with only 5.3 million ha a year ago at this time.

Customs data shows that the UK imported a rather large 194 TMT of wheat in July, the first month of the new marketing year. That's far more than the 12 TMT exported, and the 26th month in a row that imports have outstripped exports. That may be due to uncertainty over the quality of this year's crop back then, and monthly volumes will presumably decrease as the season progresses.

The pound was higher against both the US dollar and euro today as the chances of Scotland voting "yes" to exiting the Union seemingly diminished. The latest odds from the bookies tonight have a "no" vote at 1/5 favourite. The result is expected early on Friday morning.

Assuming that a "no" vote gets the nod then the pound could be firmer in the coming days. It already topped 1.27 against the euro today, it's best in more than a year. That would obviously be bearish for UK wheat export ambitions and could add a bit more downside to London wheat prices yet.

Defra today reported English wheat plantings for this year's harvest were up nearly 20% from last year at 1.8 million ha. Add on Scotland, Wales and Northern Ireland, and factor in the HGCA's current median forecast for yields at 8.5 MT/ha then we look like having a crop close to 17 MMT on our hands.

18-09-2014 08:49 AM | EU Reports
17/09/14 -- EU grains closed mixed, but mostly posted modest gains, hoping (but not with a huge degree of confidence) that the worst may finally be over, and ideas that the bulk of the harvest pressure is over and that EU grains are finally winning some good export business.

The day ended with Nov 14 London wheat up GBP1.15/tonne at GBP113.75/tonne, and Nov 14 Paris wheat closed EUR0.50/tonne lower to EUR161.50/tonne. Nov 14 Paris corn was up EUR1.25/tonne to EUR140.25/tonne and Nov 14 Paris rapeseed was EUR1.75/tonne higher at EUR325.75/tonne.

For London wheat there may well have been an element of profit-taking or short-covering ahead of tomorrow's Scottish independence referendum. A "yes" vote would potentially send the pound into a tailspin.

France managed a clean sweep in yesterday's Egyptian tender. Algeria bought 50 TMT of optional origin durum wheat for Jan shipment overnight. Tunisia are in the market for 92 TMT of optional origin wheat and 75 TMT of optional origin barley, both for Nov-Dec shipment. Turkey bought 200 TMT of milling wheat of unspecified origin for Sep/Oct shipment.

Russian wheat was also comfortably out-priced in yesterday's Egyptian tender.

Their harvest currently stands at 87.3 MMT off 71.2% of plan, with wheat accounting for 52.5 MMT of that total, along with 19.4 MMT of barley and 2.5 MMT of the early corn harvest (currently 18.5% complete).

Ukraine's harvest meanwhile is now 69% complete at 37.6 MMT, including 1.49 MMT of their early corn harvest (which is 8% complete). They've also harvested 4.5 MMT of sunflowers (52% done) and 810 TMT of soybeans (24% done).

APK Inform said that Ukraine had exported a record 300 TMT of rapeseed in July, although they still expect 2014/15 total shipments to decline 19% to 1.8 MMT (out of a total production this year of 2.0 MMT). As mentioned yesterday with their barley shipments, this would appear to indicate that the bulk of their export efforts have all been concentrated into the front end of the marketing campaign, as is frequently their style.

They've also already shipped more than 4 MMT of the USDA's forecast full season exports of 10 MMT of wheat this year, with September expected to be their busiest month yet this season. This situation is likely to be replicated once the full weight of the Ukraine 2014 corn harvest hits in October/November.

The Farmers' Weekly said that the UK winter OSR area could fall by as much as 15% this year (for the 2015 harvest), to less than 700k ha for the first time since 2010. This is due to a combination of low prices and the new EU ban on neonicotinoids leading to a sharp rise in pest damage. This is probably something that will also be replicated across Europe.

What, if anything, will be planted in it's place? There's not a lot of excitement around wheat prices going forward, even if Nov 15 is at a GBP13/tonne premium in London and with Dec 15 EUR14/tonne higher than the front end in Paris tonight. There may be some who will see this as an opportunity to tackle their blackgrass problem and go for the fallow option, at least until the spring.

French milling wheat FOB Rouen is said to be offered in the market at EUR161/tonne (less than GBP128/tonne) for 76kg/hl, 220 hagberg and 11% protein material. New crop corn is EUR136/tonne (under GBP108/tonne) FOB Bordeaux/La Pallice. New crop Ukraine corn is now down to $170/tonne FOB the Black Sea (around GBP104.50/tonne).

17-09-2014 08:59 AM | EU Reports
16/09/14 -- EU grains closed firmer in what looks like profit-taking and a technical rebound following the recent rout which has sent prices slumping to 4-year lows. Nevertheless, prices eased back in afternoon trade, closing well off the intra-day highs.

The day ended with Nov 14 London wheat up GBP0.60/tonne to GBP112.60/tonne, Nov 14 Paris wheat was EUR0.50/tonne higher at EUR162.00/tonne, Nov 14 Paris corn was also up EUR0.50/tonne EUR139.00/tonne and Nov 14 Paris rapeseed too was up EUR0.50/tonne at EUR324.00/tonne.

There may have been a bit of short-covering in London wheat ahead of Thursday's upcoming vote on Scottish independence, which some say could wipe 10-15% off the value of sterling should the "yes" vote claim victory.

If it doesn't, and that's the way the bookies overwhelmingly see it, then the pound could put in a little rally, although probably nothing like one of that magnitude.

Sterling was already under pressure today before the ONS said that inflation fell from 1.6% to 1.5% in August. That remains well below the Bank of England's 2% target, seemingly putting them under little pressure to think about an interest rate rise just yet.

The Russian harvest now stands at 86.7 MMT off 70.5% of the planned area (versus 71.7 MMT this time a year ago), with wheat accounting for 52.5 MMT of that total and barley a further 19.3 MMT. The 2014 Russian corn harvest is now 18% complete at 2.4 MMT, they added. Average Russian grain yields are up almost 19% versus a year ago.

SovEcon yesterday raised their forecast for the 2014/15 Russian grain crop to a very healthy 104-106 MMT, pegging exports at 31 MMT. They estimate the wheat crop at 60 MMT, with exports at 23 MMT - both numbers are a little higher than the USDA's forecasts of 59 MMT and 22.5 MMT last week.

APK Inform estimated domestic feed grain consumption in Ukraine at 17.8 MMT in 2014/15, a 4.1% rise on a year ago. They see barley consumption in feed at 3.85 MMT, up 8.6% and corn feeding at 7.35 MMT, a 2.1% rise.

It is noted that Ukraine have already exported 2.5 MMT of barley since the beginning of the 2014/15 season on Jul 1, which is the same as the figure that the USDA are currently using for the entire season. They have production down at 9 MMT this year, and total domestic barley consumption at 5.6 MMT, which suggests that they've once again massively concentrated their sales into the first quarter of the new season for cashflow reasons.

Will they do likewise with their corn crop, the harvesting of which is just getting going? Europe is already expecting a possible record corn crop of its own, which some forecasters are estimating at in excess of 70 MMT, according to a report on Reuters today.

Kazakhstan's 2014 grain harvest stands at 44.6% complete, producing a crop of 7.17 MMT to date, with yields down more than 9%.

In an interesting development for the French market, Senalia, the main silo operator in the port of Rouen, apparently said late last week that it was suspending wheat intake for "an indefinite period" due to low exports and the rapid rate at which its silos are filling up.

Senalia operate one of only two silos in the port that are approved delivery points for the Paris wheat contract. What would happen if both were full when the November contract is in delivery? Shorts would physically be unable to get a booking to deliver wheat against their sales, which is not the way that the futures market was designed to operate.

Late in the day Egypt's GASC bought three cargoes of French wheat at what looks like a very aggressive, some would say desperate looking, average price of $247.49/tonne cost and freight - the equivalent of just over GBP152/tonne.

15-09-2014 18:29 PM | EU Reports
15/09/14 -- EU grains closed mostly lower, and at fresh 4-year lows in the case of London and Paris wheat and Paris corn.

The day ended with Nov 14 London wheat down GBP0.45/tonne to GBP112.00/tonne, Nov 14 Paris wheat closed EUR1.25/tonne lower at EUR162.00/tonne, Nov 14 Paris corn was down EUR1.75/tonne to EUR138.50/tonne, whilst Nov 14 Paris rapeseed was EUR2.00/tonne higher at EUR323.50/tonne.

Russia's 2014 grain crop just keeps getting bigger. SovEcon today raised their forecast from 98 MMT to 104-106 MMT, the second largest of the post-Soviet era, beaten only by output in 2008. Wheat production this year was raised from 58 MMT to 60 MMT. Note that these are also clean weight estimates.

The Russian Ag Ministry said that the country had harvested 85.1 MMT of grains so far off 68.5% of the planned area. That compares with a harvest of only 69 MMT this time a year ago.

Wheat accounts for 52 MMT of this year's total so far (off 68.3% of plan), with barley adding a further 19.1 MMT off 82.5% of plan.

The 2014 Russian corn harvest meanwhile is now 15.6% complete at 2.1 MMT, they added.

The Russian Ministry said that Sep 1-10 grain exports were 975 TMT, including 805 TMT of wheat and 112 TMT of barley. That takes total exports so far this season (Jul 1 to Sep 10) to 8.75 MMT, including 7.69 MMT of wheat and 910 TMT of barley.

Ukraine's exports are also going well. APK Inform said that the country exported 770 TMT of grains last week, up from 540 TMT the previous week. That total included 404 TMT of wheat and 363 TMT of barley. Their new crop corn harvest is just starting to hit the market, with Agritel reporting offers for that FOB Odessa are now down to $172/tonne, which is only around GBP106/tonne sterling equivalent.

That could change though if the "yes" vote wins Thursday's Scottish referendum. Some analysts are saying that such an eventuality could send the pound reeling, sustaining losses of 10-15%, which would support London wheat and make imported corn and other grains considerably more expensive. It would also help with UK export ambitions.

A "no" vote on the other hand would have the opposite effect, although few are predicting a 10-15% upside for the pound should that happen.

With a seeming 50:50 chance that the vote could go either way, it may be worth UK arable growers sitting on their hands for a few more days, rather than biting the bullet at these loss making levels anyway.

In other news Saudi Arabia bought 610 TMT of hard wheat for Dec/Jan shipment over the weekend. Acceptable origins are European, North or South American and/or Australian.

13-09-2014 09:59 AM | EU Reports
12/09/14 -- EU grains closed mixed, with wheat lower and corn and rapeseed a little higher. It is interesting to note that, now London and Paris wheat have fallen below their respective long term support levels of GBP120/tonne and EUR170/tonne, they've quickly slumped this week to approach the GBP110/tonne and EUR160/tonne levels. Paris wheat traded as low as EUR160.50/tonne today in fact.

The day ended with Nov 14 London wheat down GBP1.55/tonne at GBP112.45/tonne, and Nov 14 Paris wheat ultimately ended EUR1.25/tonne lower to EUR162.50/tonne. Nov 14 Paris corn was up EUR1.50/tonne to EUR140.25/tonne and Nov 14 Paris rapeseed was EUR0.25/tonne higher at EUR321.50/tonne.

At the end of a dismal week for most of the sector, that puts the London market down GBP6.55/tonne, or 5.5%, versus last Friday. French wheat meanwhile has fallen EUR9.25/tonne, or 5.4%, during the same period. Corn is down EUR8.75/tonne, or 5.9%, and rapeseed has fallen EUR3.75/tonne, or a more modest 1.2%.

The French wheat contract is something of an enigma, seeing as it's possible to deliver product which is little better than feed wheat against it this season (albeit at an allowance), and feed wheat is something that France has in abundance this year.

In fact, let's use the Farm Ministry's production estimates from earlier in the week, along with FranceAgriMer's statement that only 59% of this year's crop is suitable for breadmaking versus 95% a year ago. The two combined tell us that the volume of this year's crop that isn't suitable for breadmaking is up from less than 2 MMT in 2013 to almost 15.4 MMT this year - a figure above that of the UK's entire wheat crop of the past two seasons and a more than 8-fold increase.

This may go some way towards explaining the scale of the problem that France have on their hands this year, and why they are so apparently willing to undercut UK feed wheat substantially on the international export markets.

A different headache that could also be brewing in the wings is that the French port of Rouen is still the sole delivery point against the Paris future, at least it is until September of next year. Open interest in the front end Nov 14 contract is currently in excess of 7.8 MMT, which is far higher than the port's nominated futures storage capacity. It is theoretically possible therefore that some wishing to make delivery against the contract simply find it impossible to do so as the stores could already be full.

What would happen then? A contract that it could be impossible to deliver against, with a quality specification set by the store, one which potentially changes every year, and we don't know what next year's spec will be yet until after the harvest. That doesn't sound like much of a hedging tool does it?

Meanwhile Germany's BayWa Group said that they had unusually sold around 100 TMT of German milling wheat to France in recent weeks. They are also known to have bought various other origins, including British, to "blend" in with their own sub-standard crop this year.

That immediately gives them a problem in being sellers to Algeria, who's state buyer (OAIC) has already stated that the will not accept wheat from multiple origins in their tenders. They were said to have bought 400 TMT of optional origin milling wheat at around $254.50/tonne cost & freight in tenders this week.

Sharply higher French wheat imports, and reduced demand from non-EU destinations, are likely to push their 2014/15 stocks at the end of the season to a 12-year high of 3.9 MMT, FranceAgriMer said this week. Even that estimate is already starting to look low.

The French analysts today said the the country's 2014 corn harvest had yet to begin, as of Monday. They trimmed the proportion of the crop rated good to very good by one percentage point to 85%, although that's still historically high and far better than only 56% this time a year ago.

At home, the HGCA said that the UK wheat harvest is now 95% done, pegging the average yield at 8.4-8.6 MT/ha. That potentially takes production this year close to the 17 MMT mark. The winter barley harvest is all wrapped up, and there's still 20% of the spring barley crop left to be cut. Spring OSR is now 40% harvested, they added.

Russia's huge grain harvest has now reached the 84.3 MMT mark, off 67.6% of the planned area, including 51.7 MMT of wheat (off 67.5% of plan). The Kazakh harvest stands at just under 6 MMT off 37% of plan, with Ukraine at almost 37 MMT off 68% of the combinable area.

12-09-2014 08:59 AM | EU Reports
11/09/14 -- EU grains closed lower, helped on their way by a bearish World Supply And Demand Report from the USDA.

The day ended with Nov 14 London wheat down GBP3.00/tonne to GBP114.00/tonne, Nov 14 Paris wheat was EUR3.25/tonne lower at EUR164.00/tonne, Nov 14 Paris corn was down EUR4.00/tonne EUR138.75/tonne and Nov 14 Paris rapeseed was EUR2.00/tonne easier at EUR321.25/tonne.

The USDA raised their global wheat production estimate by almost 4 MMT to a record near 720 MMT, largely due to a 3 MMT hike for the EU to just shy of 151 MMT, close to the all time high set in 2008/09. Ukraine's crop was also raised 2 MMT to 24 MMT.

World wheat ending stocks in 2014/15 were raised from the near 193 MMT forecast last month to nearly 196.4 MMT, which was more than the 193.75 MMT expected.

"Russia’s wheat and barley exports are both projected at record levels. Corn exports are also expected to remain strong, although down from last year’s record," they said.

All four of Europe's largest wheat producing nations all saw their production estimates rise.

The French crop is now estimated at 39.1 MMT versus 38.7 MMT a month ago and last year's 38.5 MMT. Germany's crop was increased to 26.15 MMT from 25.6 MMT, the UK's was upped to 16.25 MMT from the 15.4 MMT forecast a month ago and Poland's wheat crop was now estimated at 10.25 MMT versus 9.6 MMT in August.

The EU corn crop was also increased to 68.35 MMT from 67.05 MMT a month ago and 64.19 MMT last year. The EU barley crop was raised from 56.2 MMT to 56.98 MMT, with production in the UK increased from 5.9 MMT to 6.15 MMT.

Meanwhile the EU rapeseed crop was forecast at 23.40 MMT versus 22.65 MMT a month ago and 21.1 MMT last year.

On the export front, the EU is now seen shipping out 26 MMT of wheat in 2014/15, up 1 MMT from a month ago, although still down almost 6 MMT versus last season.

Wheat ending stocks in Europe are now forecast at 15.1 MMT versus a little under 13 MMT a month ago and 10.2 MMT at the end of last season. These would be the largest since 2009/10.

Algeria's Ag Ministry estimated their 2014 grain crop at 3.4 MMT versus 4.9 MMT last year. The USDA raised their forecast for Algeria's wheat imports from 6 MMT to 7 MMT, although that's still a little under the 7.5 MMT that they bought in 2013/14.

"Weather data confirms that dryness occurred in eastern Algeria during the sensitive reproductive stage for wheat. While the period of dryness was rather brief, it occurred when the crops were flowering and at their most moisture-dependent phase," said the USDA.

11-09-2014 08:29 AM | EU Reports
10/09/14 -- EU grains closed lower across the board, and at fresh 4-year lows on London and Paris wheat, along with Paris corn.

The day ended with Nov 14 London wheat down GBP1.05/tonne to GBP117.00/tonne, Nov 14 Paris wheat closed EUR2.00/tonne lower at EUR167.25/tonne, Nov 14 Paris corn was also down EUR2.00/tonne to EUR142.75/tonne, whilst Nov 14 Paris rapeseed was EUR0.75/tonne easier at EUR323.25/tonne.

The trade is bracing itself for what is expected to be a bearish USDA report tomorrow, which is expected to show record 2014/15 global production of wheat, corn and soybeans, with ending stocks of all three thought likely to rise again from a month ago.

Few are expecting anything bullish, even if the USDA's capacity to spring a surprise borders on the legendary. One or two are maybe hoping that the report might not be as bearish as anticipated, which could spark a rally.

Meanwhile there's a another huge corn crop on the way, not just in the US but also in Europe and the Black Sea.

French corn growers group AGPM forecast the crop there this year at a record 17.25 MMT, up 17% on last year's 14.73 MMT.

The French corn crop has been rated consistently highly all year, FranceAgriMer reported on Friday that 86% of the crop was in good to very good condition versus only 55% a year ago.

Today they said that only 46% of this year's French wheat crop has hagberg levels of 220 or higher, the standard demanded by the majority of the traditional North African export homes. Last year the proportion was 99%. Specific weights are also down this year to an average 76.3 kg/hl from 77.6 kg/hl in 2013. The average protein content in French wheat this year is said to be 11.1% versus 11.2% a year ago.

They also said that only 59% of this year's crop was rated of good to very good quality for bread-making as opposed to 95% a year ago.

This leaves France with an unusually large volume of feed wheat to sell this year, something which they have wasted little time in bringing to market, understandably considering that it now looks like there's a record corn crop almost ready to harvest.

FranceAgriMer said that total French wheat exports would fall 15.4% this season, with those to non-EU destinations seen down 34.5% to a seven year low of only 8 MMT, largely due to these quality issues.

Russia said that it had now harvested 83.6 MMT of its 2014 grain crop off only 66.8% of the planned area. The total includes 51.3 MMT of wheat, 18.8 MMT of barley and 1.9 MMT of corn.

Russia are said to be lining up a deal to export wheat to Iran in exchange for fruit, vegetables and oil following the recent introduction of EU and US sanctions against it. That could cut demand for German wheat which has made significant inroads to the Iranian market in the last 12 months since sanctions against them were eased.

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