EU Reports
24-07-2014 08:49 AM | EU Reports
23/07/14 -- EU grains closed mixed with Nov 14 London GBP0.05/tonne lower at GBP127.60/tonne, Nov 14 Paris wheat was up EUR1.50/tonne to EUR179.50/tonne - although just failing to stay above the important EUR180/tonne level. Aug 14 Paris corn was down EUR2.50/tonne at EUR157.75/tonne and Aug 14 Paris rapeseed jumped EUR7.00/tonne to EUR321.75/tonne.

Continued talk of widespread problems with the quality of this year's French wheat harvest supported the Paris market today. The wetness that is causing the problems for wheat is viewed as beneficial for corn however, and it also potentially means that there will be more feed wheat on the market in 2014/15, in direct competition to corn.

Could the London and Paris wheat markets go in opposite directions? In dollar terms tonight's close puts the spread between the two Nov 14 contracts at around $24/tonne. That's the largest differential since May 2013. However "back in the oft-cited year of poor quality of 2007 we saw the spread between the two jump to $60/tonne, so we’re not seeing anything historic just yet," says my Twitter chum Tregg Cronin at Halo Commodities in the US.

"The currency influence and the lighter volume can make these spreads volatile, but the Paris Wheat/UK wheat spread is worth paying attention to," he notes. It may also be worth keeping an eye on the wheat/corn spread too.

Reuters report a French exporter this week buying Polish milling wheat to cover existing sales that they would have expected to fulfil with French material. French traders have also been said to be seeking/buying German wheat this week.

Egypt's GASC bought 235 TMT of Russian, Romanian and Ukraine wheat in their tender for Sep 1-10 shipment. The prices paid were said to be around $256.60 C&F, that's down from around $260-261 C&F paid for Romanian wheat for late August shipment a fortnight ago. Some might see the fact that there were no French offers made as being significant.

Jordan passed on a tender to purchase 100 TMT of optional origin hard milling wheat and immediately re-tendered for the same, in their usual way. Iran is said to be looking for 50 TMT of Black Sea wheat for prompt shipment.

Russia's 2014 grain harvest is now 20.8% complete, producing a crop of 33.6 MMT to date, with average yields of 3.47 MT/ha, an 18.8% increase on this time last year. Wheat accounts for 28 MMT of that total off 30.7% of the planned area. Wheat yields are averaging 3.6 MT/ha versus 3.1 MT/ha a year ago, say the Ag Ministry.

The Ukraine early grains harvest (which excludes corn) meanwhile is already 60% complete producing a crop of 19.1 MMT. Yields are averaging 3.22 MT/ha, up more than 9% on a year ago. Wheat accounts for 13.1 MMT of that total with yields at 3.49 MT/ha. The Ukraine Ministry say that 63% of the wheat harvested so far is of milling standard (versus around 70% a year ago).

The French rapeseed harvest has progressed to the north east of the country, and yields so far are disappointing and seed sizes are small. Wet weather in Germany means that the rapeseed harvest there has stalled, giving rise to yield and quality concerns.

The UK rapeseed harvest meanwhile is said to be around halfway done, with yields "slightly above average" but with the prospect of better yields to come, according to ADAS. Even slightly above average would be a big improvement on a year ago. Earlier in the week MARS increased their forecast for UK yields from 3.76 MT/ha a month ago to 3.81 MT/ha. That's 28.1% up versus 2013 and 11.4% above the 5-year average.

Wheat prospects in the UK also still look promising. After a couple of poor harvests in a row, maybe we were due a change of luck in 2014?

22-07-2014 19:09 PM | EU Reports
22/07/14 -- EU grains markets posted a mini "Turnaround Tuesday" event, closing mostly higher, consolidating from recent heavy losses that have driven prices to multi-year lows.

The day finished with Nov 14 London wheat up GBP060/tonne at GBP127.65/tonne, Nov 14 Paris wheat ended EUR1.75/tonne higher at EUR178.00/tonne, Aug 14 Paris corn was down EUR5.25/tonne at EUR160.25/tonne, whilst Aug 14 Paris rapeseed was up EUR5.75/tonne to EUR314.75/tonne.

Fresh news was relatively thin on the ground. Russia’s Ag Ministry said that as of Jul 21 the country had harvested 31.7 MMT of grain on 9.1 million hectares. Average yields are said to be 3.48 MT/ha, up 19% on a year ago.

Is all the good news coming out of Russia simply too good to be true and at least partly a reaction to the bad press that they have been getting from the West lately?

We still don’t know how this developing situation will pan out. A best case scenario would seem to be an edgy stalemate developing, with Russia pulling back on its apparent support for the rebels in the east of Ukraine.

A deepening of the conflict would cause further destabilisation in eastern Ukraine, with the possibility of greater/extended Russian intervention. That could even lead to Russia attempting to annex Eastern Ukraine- where the majority of Russian speakers and sympathisers reside.

They did after all take Crimea with barely a whimper from the West.

Such a move would undoubtedly lead to tough “level 3” sanctions from Europe. This would make it more difficult for Russian banks and major businesses to access global capital markets. Don't forget that Russia is already teetering on the brink of recession.

Putin would not want that, but climbing down is not his forte. If the country was to be pushed into recession then who better to blame than the West?

Back to the fundamentals. Ukraine said that they'd exported 1.19 MMT of grain so far this month, including 232 TMT of wheat, 660 TMT of barley and 284 TMT of corn. Their harvest is also said to be going well by the Ag Ministry with yields up 7.5%, but who's to say that they aren't also playing the same game as Russia?

Currently international buyers still seem relatively relaxed about buying from Russia, but that’s a situation that could change quickly. Ukraine could also soon be viewed as an “unreliable” supplier if there were question marks raised over its ability to honour its contractual obligations.

Meanwhile, there's growing chatter that all is far from well with France's wheat harvest. The volume might be there, but the quality may not be. Reuters report that premiums for higher quality milling wheat jumped yesterday after more heavy weekend rains. Quality premiums are now "close to levels seen during the poor quality harvest of 2007," they said. Some French buyers are now looking to Germany for their requirements, Reuters suggested.

That could still spell bad news for feed wheat of course, especially with a large EU and FSU corn crop potentially waiting in the wings.

That may also explain the poor performance by Paris corn today, relative to the other grains. The wet weather may be damaging to milling wheat quality, but beneficial to spring planted corn.

22-07-2014 09:09 AM | EU Reports
21/07/14 -- EU grains closed lower again, with London and Paris wheat slumping to fresh 4 year lows.

The day ended with new crop Nov 14 London wheat closing GBP1.95/tonne lower at GBP127.05/tonne, Nov 14 Paris wheat was EUR3.00/tonne easier at EUR176.25/tonne, Aug 14 Paris corn was down EUR1.25/tonne to EUR165.50/tonne and Aug 14 Paris rapeseed fell EUR8.25/tonne to EUR309.00/tonne.

Paris wheat prices are now at 4-year lows, along with London wheat. Paris rapeseed meanwhile fell more than EUR20/tonne to EUR296.50/tonne (a 4 1/2 year low) in early dealing, before recovering some of those losses.

The EU Commission's MARS unit forecast EU-28 average soft wheat yields at 5.80 MT/ha, similar to last year and 4.2% above the 5-year average. All barley yields were estimated at 4.54 MT/ha, slightly below 4.85 MT/ha in 2013, although still 1.2% up on the 5-year average. Corn yields were estimated at 7.23 MT/ha versus 6.72 MT/ha in 2013 and 6.6% above the previous 5-year norm. OSR yields were forecast at 3.32 MT/ha versus 3.11 MMT last year and 8.4% higher than the 5-year average.

In the UK specifically, they estimated the wheat yield at 8.13 MT/ha. That's up from their previous forecast of 8.05 MT/ha last month, 10.1% higher than a year ago and 8.5% above the 5-year average.

They said that UK 2014 barley yields would come in at 5.81 MT/ha, down from the 5.86 MT/ha forecast a month ago, and 0.7% below last year's 5.85 MT/ha. That's still 1.2% above the 5-year average however.

As far as UK rapeseed yields go, they increased their forecast from 3.76 MT/ha a month ago to 3.81 MT/ha. That's 28.1% up versus 2013 and 11.4% above the 5-year average.

On face value, if we were to assume that these yield estimates are correct, and that the HGCA/Defra planted area figures are also accurate, then the UK would end up with a 2014 wheat crop of 15.93 MMT (versus 11.92 MMT in 2013), along with 6.33 MMT of barley (7.09 MMT last year) and 2.74 MMT of rapeseed (2.13 MMT). That of course excludes any whole cropping.

"The overall EU-28 cereal yield forecast for 2014 is favourable, at the level of last year and above the average of the past five years (by 4.4%). Aside from durum wheat and spring barley, all cereals are significantly above the five-year average and close to the good yield levels of 2013," MARS said.

In the UK they said that "weather conditions were generally favourable for winter and spring crops. Substantial rain during the first half of July benefited spring crops in particular, but could locally have affected the grain quality of winter cereals."

Elsewhere, the Ukraine Ag Ministry said that the country's early grains harvest (excluding corn) had produced a crop of 16.11 MMT to date off 52% of the combinable area. Yields are up 7.5% at 3.14 MT/ha. That total includes 10.87 MMT of wheat and 4.97 MMT of barley. Ukraine growers have also harvested 1.29 MMT of winter OSR.

The Russian Ag Ministry said that they'd exported over 1 MMT of grain in the Jul 1-16 period, an increase of 47% on a year ago. That total includes 807 TMT of wheat, 164 TMT of barley and 34 TMT of corn. Russia’s Ag Ministry estimated Russia 2014/15 grain exports at 27-30 MMT versus 25.372 MMT in 2013/14.

Reuters reported that private Egyptian buyers purchased 60 TMT of Black Sea milling wheat, including 30 TMT of 12.5% protein material at $257 C&F (around GBP150.50/tonne including freight) and 30 TMT of 11.5% product at $247 C&F (circa GBP144.50/tonne including freight).

Pakistan were said to have bought 130,000 MT of Black Sea origin wheat for July/August shipment.

19-07-2014 10:09 AM | EU Reports
18/07/14 -- Blink and you might have missed it, yesterday's attempted rally in EU grains following the shooting down of the Malaysian passenger plane over Eastern Ukraine proved to be a very short-lived window of opportunity (if you can call 298 deaths due to an act of terrorism an opportunity). Not that much, if any, business was probably done on the back of it in the cash markets.

EU grains closed lower across the board with Nov 14 London wheat erasing all of yesterday's gains finishing GBP3.00/tonne lower at GBP129.00/tonne, Nov 14 Paris wheat was down EUR3.75/tonne to EUR179.25/tonne - closing back below the important EUR180/tonne level. Aug 14 Paris corn was down EUR2.25/tonne at EUR166.75/tonne and Aug 14 Paris rapeseed slumped another EUR5.50/tonne to EUR317.25/tonne.

For the week that puts front month London wheat down GBP1.55/tonne, with Paris wheat falling EUR1.25/tonne, corn down EUR2.25/tonne and rapeseed crashing EUR14.00/tonne.

Harvest pressure remains, although rains on the continent have slowed progress this week, and could also be doing some damage to quality it is thought. The UK too is bracing itself for the widespread thunderstorms and associated heavy rains that traditionally accompany the kids breaking up for their summer school holidays with near perfect timing.

That could ultimately mean less milling wheat and more feed grade wheat kicking around both here and on the continent, potentially increasing milling premiums, which will provide a welcome and needed little boost if it's milling wheat that you've got. It won't do a lot for feed wheat growers though, and could widen the gap between London and Paris wheat further. Talking of gaps, it's worth noting that the premium that Nov 15 London wheat now commands over Nov 14 has widened to GBP12.25/tonne compared to just 50 pence at the end of March.

Brussels confirmed that they'd issued 151 TMT of soft wheat export licences this past week, taking the new 2014/15 season total to 501 TMT so far. They've also granted 211 TMT worth of barley exports, taking the marketing year total to date to 569 TMT. As wheat goes out, corn comes in though, with 387 TMT worth of corn import licences issued, taking the new season total so far to 644 TMT.

The EU also granted 18,160 MT worth of duty free wheat import licences to Ukraine, taking the total issued so far to 145 TMT out of an agreed quota of 950 TMT that Ukraine is allowed to export to the EU by Oct 31 under a special preferential trade agreement.

The Russian grain harvest is gathering pace at 15.4% done producing a crop of 24.9 MMT so far. Yields are up sharply, averaging 3.51 MT/ha, an increase of 16.6% on last year at this time. Wheat accounts for 20.5 MMT of that total off 22.7% of the planned area.

FranceAgriMer said that the French wheat harvest was 5% done as of Monday versus 2% a week ago and 2% complete this time last year. The French winter barley crop advanced to 83% done versus 78% last week and 40% complete at this point in 2013. They said that 28% of the corn crop is silking, up from 7% a week ago and versus zero this time last year.

They said that 70% of the French wheat crop was rated to be in good/very good condition, unchanged on a week ago. Winter barley and corn rated good/very good were also unchanged on a week ago at 71% and 83% respectively.

Egypt said that reforms to their subsidised bread programme will cut their wheat import needs by around 30%.

Ukraine new crop corn offers are now said to be down to $188/tonne FOB, which is the equivalent of around GBP110/tonne. Oct/Dec optional origin corn CIF the Netherlands is said to be offered in the market at EUR165/tonne, which is around GBP130.60/tonne, with feed wheat offers around just EUR3/tonne higher.

17-07-2014 20:19 PM | EU Reports
17/07/14 -- EU grains markets reverted to type for much of the day, trading mostly lower again. Aug 14 Paris rapeseed had another particularly difficult day and slumped to the lowest levels for a front month in what is now more than 4 years.

However, showing how vulnerable these markets are to a sudden and without warning upside correction, breaking news very late in the day that a Malaysian passenger plane had been "shot down" on the Ukraine/Russian border suddenly sparked a wave of short-covering sending markets mostly higher.

The day finished with Nov 14 London wheat up GBP2.75/tonne at GBP132.00/tonne, Nov 14 Paris wheat ended EUR4.00/tonne higher at EUR183.00/tonne, Aug 14 Paris corn was up EUR1.00/tonne at EUR169.00/tonne, whilst Aug 14 Paris rapeseed still even couldn't manage a rally, falling EUR3.00/tonne to EUR322.75/tonne.

As far as fundamental news goes...

Strategie Grains raised their forecast for the EU-28 wheat, barley and corn crops versus last month, although they did warn that recent rains (and more in the forecast) might be doing some damage. For now they estimated that 67% of the EU wheat crop would make milling standard, that's down 4 points on a year ago and puts the EU-28 milling wheat crop at 94 MMT versus 97 MMT in 2013. However, "quality and even yields could deteriorate significantly" if heavy rain on the continent persists for much longer, they said. Very early French wheat cuts do suggest a reduced proportion of milling wheat there this year.

That does of course mean more feed wheat around, posing further competition for barley, the price of which is already well below GBP110/tonne ex farm in most parts of the UK off the combine. There's also then the glut of cheap European and FSU corn to contend with too.

As far as the numbers go, the French analysts pegged the EU-28 soft wheat crop at 140.5 MMT, a 1 MMT rise on their June forecast and a 4% hike on last year's production. They raised their outlook on barley by 700 TMT to 56.2 MMT, which is still 6% down on last year, and increased their forecast for corn production in the Union by 500 TMT to 66.4 MMT, which is 3% more than a year ago.

Conversely there appear to be no such problems in Russia, where local analysts ProZerno said yesterday that the early harvest results are showing a larger proportion of this year's wheat crop is of milling standard than in 2013. Russian growers have harvested 22.2 MMT of gains so far, with average yields up 15.7% at 3.53 MT/ha, say the Ag Ministry. Wheat accounts for 18.5 MMT of that total off 20.4% of the planned area, with yields up 13.5% at 3.62 MT/ha. Barley adds a further 2.6 MMT off 8.3% of plan with yields up 24.5% at 3.40 MT/ha.

In Ukraine meanwhile, the early grain harvest (excluding corn) has advanced to 44% complete on 4.31 million hectares, producing a crop of 13.09 MMT as of Jul 15. This total doesn't now include Crimea. Average yields in Ukraine are said to be up 5.2% versus 2013 at 3.04 MT/ha. Wheat accounts for 8.4 MMT of the total and barley a further 4.48 MMT. In addition they've now cut 476k hectares of winter OSR, producing 958 TMT to date.

Kazakhstan said that they will produce an 18 MMT grain crop this year (in bunker weight), versus 18 MMT in clean weight last year.

At home, the HGCA said that early UK barley yields "are above average whilst the first winter oilseed rape yields are close to average." They did however note that this information is based on a very small sample size, even though the limited progress made so far is in line with typical harvest years. UK growers will be anxiously monitoring the weather in the days ahead then, with heavy and widespread thunderstorms forecast for the weekend.

Israel bought 108 TMT of corn and 50 TMT of feed wheat in a tender, both were said to have been of Black Sea origin.

The pound pared recent strong gains against the euro and US dollar, that pushed the UK currency to a 2 1/2 year high against the former and a 6 year high versus the latter this week. Nevertheless, the outlook for the BOE to be the first major central bank to break ranks and raise interest rates before too long continues to underpin sterling.

US interest rates meanwhile are stuck at zero, whilst European Central Bank president Mario Draghi has recently said that Eurozone interest rates will stay at 0.15% for an "extended period" of time.

A prolonged period of sterling strength will of course do nothing for UK export hopes/needs in 2014/15, whilst serving to only make imports of corn from Europe and the FSU even cheaper.

That leaves UK growers caught between a rock and a hard place, with cereal prices now below the cost of production and with them having what one domestic trader suggested was "the lowest percentage (forward) sold in living memory".

Back to "outside influences"....

The late and developing breaking news concerning the downed Malaysian airplane might govern price movements in the next few days, or even for longer. How long that influence will last is anybody's guess, I personally suspect not for that long. It's a reminder though that outside news, often totally unconnected with the grains markets, can ultimately have an influence on where prices go, at least in the short-term. Crimea, Chernobyl, Fukushima etc...

17-07-2014 20:09 PM | EU Reports
17/07/14 -- EU grains markets reverted to type for much of the day, trading mostly lower again. Aug 14 Paris rapeseed had another particularly difficult day and slumped to the lowest levels for a front month in what is now more than 4 years.

However, showing how vulnerable these markets are to a sudden and without warning upside correction, breaking news very late in the day that a Malaysian passenger plane had been "shot down" on the Ukraine/Russian border suddenly sparked a wave of short-covering sending markets mostly higher.

The day finished with Nov 14 London wheat up GBP2.75/tonne at GBP132.00/tonne, Nov 14 Paris wheat ended EUR4.00/tonne higher at EUR183.00/tonne, Aug 14 Paris corn was up EUR1.00/tonne at EUR169.00/tonne, whilst Aug 14 Paris rapeseed still even couldn't manage a rally, falling EUR3.00/tonne to EUR322.75/tonne.

As far as fundamental news goes...

Strategie Grains raised their forecast for the EU-28 wheat, barley and corn crops versus last month, although they did warn that recent rains (and more in the forecast) might be doing some damage. For now they estimated that 67% of the EU wheat crop would make milling standard, that's down 4 points on a year ago and puts the EU-28 milling wheat crop at 94 MMT versus 97 MMT in 2013. However, "quality and even yields could deteriorate significantly" if heavy rain on the continent persists for much longer, they said. Very early French wheat cuts do suggest a reduced proportion of milling wheat there this year.

That does of course mean more feed wheat around, posing further competition for barley, the price of which is already well below GBP110/tonne ex farm in most parts of the UK off the combine. There's also then the glut of cheap European and FSU corn to contend with too.

As far as the numbers go, the French analysts pegged the EU-28 soft wheat crop at 140.5 MMT, a 1 MMT rise on their June forecast and a 4% hike on last year's production. They raised their outlook on barley by 700 TMT to 56.2 MMT, which is still 6% down on last year, and increased their forecast for corn production in the Union by 500 TMT to 66.4 MMT, which is 3% more than a year ago.

Conversely there appear to be no such problems in Russia, where local analysts ProZerno said yesterday that the early harvest results are showing a larger proportion of this year's wheat crop is of milling standard than in 2013. Russian growers have harvested 22.2 MMT of gains so far, with average yields up 15.7% at 3.53 MT/ha, say the Ag Ministry. Wheat accounts for 18.5 MMT of that total off 20.4% of the planned area, with yields up 13.5% at 3.62 MT/ha. Barley adds a further 2.6 MMT off 8.3% of plan with yields up 24.5% at 3.40 MT/ha.

In Ukraine meanwhile, the early grain harvest (excluding corn) has advanced to 44% complete on 4.31 million hectares, producing a crop of 13.09 MMT as of Jul 15. This total doesn't now include Crimea. Average yields in Ukraine are said to be up 5.2% versus 2013 at 3.04 MT/ha. Wheat accounts for 8.4 MMT of the total and barley a further 4.48 MMT. In addition they've now cut 476k hectares of winter OSR, producing 958 TMT to date.

Kazakhstan said that they will produce an 18 MMT grain crop this year (in bunker weight), versus 18 MMT in clean weight last year.

At home, the HGCA said that early UK barley yields "are above average whilst the first winter oilseed rape yields are close to average." They did however note that this information is based on a very small sample size, even though the limited progress made so far is in line with typical harvest years. UK growers will be anxiously monitoring the weather in the days ahead then, with heavy and widespread thunderstorms forecast for the weekend.

Israel bought 108 TMT of corn and 50 TMT of feed wheat in a tender, both were said to have been of Black Sea origin.

The pound pared recent strong gains against the euro and US dollar, that pushed the UK currency to a 2 1/2 year high against the former and a 6 year high versus the latter this week. Nevertheless, the outlook for the BOE to be the first major central bank to break ranks and raise interest rates before too long continues to underpin sterling.

US interest rates meanwhile are stuck at zero, whilst European Central Bank president Mario Draghi has recently said that Eurozone interest rates will stay at 0.15% for an "extended period" of time.

A prolonged period of sterling strength will of course do nothing for UK export hopes/needs in 2014/15, whilst serving to only make imports of corn from Europe and the FSU even cheaper.

That leaves UK growers caught between a rock and a hard place, with cereal prices now below the cost of production and with them having what one domestic trader suggested was "the lowest percentage (forward) sold in living memory".

Back to "outside influences"....

The late and developing breaking news concerning the downed Malaysian airplane might govern price movements in the next few days, or even for longer. How long that influence will last is anybody's guess, I personally suspect not for that long. It's a sad reminder that outside news, often totally unconnected with the grains markets, can ultimately have an influence on where prices go, at least in the short-term. Crimea, Chernobyl, Fukushima etc...

16-07-2014 19:59 PM | EU Reports
16/07/14 -- EU grains closed mostly higher for once, in consolidation/bargain hunting following the recent rout.

The day ended with new crop Nov 14 London wheat closing GBP0.45/tonne firmer at GBP129.25/tonne, Nov 14 Paris wheat was EUR2.00/tonne steadier at EUR179.00/tonne, Aug 14 Paris corn was up EUR0.50/tonne to EUR168.00/tonne and Aug 14 Paris rapeseed was EUR4.25/tonne easier at EUR325.75/tonne - another new 4 year low.

It's still far to premature to call this a recovery. The pound rose to it's highest levels against the euro in almost 2 years today, which will hinder the chance of any UK cereal exports in 2014/15. Despite the weaker euro, Paris wheat also remains anchored below key support at EUR180/tonne.

The Spanish Ag Ministry said that wheat production there (excluding durum) would only total 5.5 MMT this year. That's down from their previous estimate of 5.9 MMT and 18% lower than 6.7 MMT a year ago. The 2014 Spanish barley crop will only total 6.7 MMT versus 7.9 MMT previously and 10.1 MMT a year ago, they added.

On the flip side, Russia's Ag Ministry now estimate the 2014 grain crop there at over 100 MMT versus 92.4 MMT a year ago. Is this at least partly due to a bout of "my Dad is bigger than your Dad" bravado following the recent spat with Ukraine? SovEcon opt for a more modest 90 MMT, including 50 MMT of wheat and 12 MMT of corn - even if the latter is a record volume. APK Inform estimate the Russian grain crop at 93.6 MMT, of which 52 MMT will be wheat, 16 MMT barley and 11.8 MMT corn.

Rusagrotrans said that Russia will export 2.0-2.3 MMT of grains in July, up from a previous estimate of 1.8-2.0 MMT, but less than the 2.53 MMT exported in the same month in 2013. That's probably due to the Russian harvest being delayed by rain.

The Russians have harvested 22.2 MMT of grain so far versus 26.1 MMT a year ago, although average yields are reported to be up nearly 16% at 3.53 MT/ha by the Russian Ag Ministry.

Wheat now accounts for 18.5 MMT of that total, off 20.4% of the planned area, they say.

At home, the Farmers Weekly website said that the UK harvest was underway in the south west, where early yields and quality are "reasonably promising" for barley and OSR. The OSR harvest in Essex is already estimated to be 50% complete, with "rapid progress" being made. The wheat harvest in the county though is probably still 7-10 days away, they added.

UK customs data shows that we imported over 182 TMT of wheat in May, a seven month high, along with close to 200 TMT of corn. That takes the 2013/14 seasonal total to almost 2MMT of wheat and nearly 2.3 MMT of corn, beating Defra forecasts for both with one month's worth of figures still to come.

Falling world grain prices mean that the EU Commission have set the import duty on corn, rye and sorghum at EUR5.32/tonne versus zero previously. Currently 400 TMT of Ukraine corn is still allowed to be imported into the EU levy free (to Oct 31 of this year) under a beneficial agreement with Kiev.

Ukraine are also forecasting a second bumper crop production program in a row. Again, could there also be a political motivation behind this? Whether the answer is yes or no, for the time being at least this is driving local prices lower.

Agritel report that new crop Nov/Dec Ukraine corn is currently offered in the market at $183-188/tonne FOB the Black Sea (the UK equivalent of around GBP107-110/tonne), with prices having fallen $20/tonne in the past week. They also say that Ukraine 11.5% milling wheat is offered at $235-238/tonne, circa GBP138-139/tonne, with 12.5% milling wheat at $250/tonne which is around GBP146/tonne.

Reuters reported that Algeria's state grains agency has purchased 810,000 MT of milling wheat, likely from France, at $268-269.50/tonne C&F (circa GBP157/tonne including freight).

16-07-2014 08:59 AM | EU Reports
15/07/14 -- EU grains closed mostly lower, as the fall out from last Friday's bearish USDA report continues.

New crop Nov 14 London wheat finished GBP0.90/tonne lower at GBP128.80/tonne, Nov 14 Paris wheat was down EUR1.75/tonne to EUR177.00/tonne, Aug 14 Paris corn was unchanged at EUR167.00/tonne and Aug 14 Paris rapeseed finished EUR1.50/tonne weaker at EUR330.00/tonne.

Paris wheat slumped to a fresh 2 1/2 year low as an attempt to rally back up above the psychologically important EUR180/tonne level failed, whilst for London wheat this was a new 4 year low.

The minutiae of Friday's USDA report reveals improved crop production prospects for parts of Europe, including the UK and Germany, along with Ukraine.

The USDA raised their forecast for the UK wheat crop in 2014 from 15.15 MMT to 15.30 MMT, a 28% jump on last year. They also increased the potential size of the German wheat crop from 24.3 MMT to 25.6 MMT and raised Ukraine by 1 MMT to 21 MMT.

Although they left their estimate for the UK 2014 barley crop unchanged from last month at 5.9 MMT, they raised their outlook on Germany's barley production from 10.22 MMT to 10.58 MMT, and increased Ukraine's barley output from 7.0 MMT to 7.8 MMT.

Russia said that it had now harvested over 20 MMT of grain, with average yields coming in at 3.55 MT/ha, a rise of over 15% versus 3.08 MT/ha this time a year ago.

On a national level the Russian wheat harvest is said to be 16.4% complete at 14.9 MMT, with the barley harvest 7.7% done producing a crop of 2.4 MMT so far.

The Ukraine 2014 grain harvest has produced more than 12 MMT so far, including 7.6 MMT of wheat where yields are averaging 3.2 MT/ha, and 4.3 MMT of barley at 2.77 MT/ha. Average grain yields this time a year ago were only 2.7 MT/ha.

Yields should improve as the harvest progresses into the generally more productive areas, said Agritel. They raised their forecasts for both Russian and Ukraine wheat production this year, although suggested that around only 50% of the Ukraine crop might make milling standard as opposed to 70% last year.

Russian origin grain was said to be the cheapest offer in an Iraqi tender for 50,000 MT of hard wheat at $308.58/tonne CIFFO. Ukraine wheat was offered at $311.15/tonne versus Canadian at $324.59/tonne, Australian at $343/tonne and US wheat at $362.96/tonne.

Ukraine new crop corn prices continue to tumble, with FOB offers now said to be around $192/tonne, the equivalent of around GBP112/tonne.

15-07-2014 08:49 AM | EU Reports
14/07/14 -- EU grains markets finished mostly lower again, extending the recent theme. Nov 14 London wheat set a fresh contract lifetime low, and also finished at a fresh lowest close for a front month in almost 4 years.

The day finished with Nov 14 London wheat down GBP0.85/tonne at GBP129.70/tonne, Nov 14 Paris wheat ended EUR1.75/tonne lower at EUR178.75/tonne, Aug 14 Paris corn was down EUR1.50/tonne at EUR167.50/tonne, whilst Aug 14 Paris rapeseed managed a EUR0.25/tonne rise to EUR331.50/tonne although all other months were lower.

As well as London wheat setting various significant lows, this was also the lowest front month close on Paris wheat since November 2011 as the future ended the day below critical long-term support at EUR180/tonne. A sustained period below this level would be seen as very bearish. In addition this was the lowest front month close on Paris corn since November 2013.

Harvest pressure, and the outlook for bumper EU and global grain and oilseed production in 2014/15, together with a delayed reaction to Friday night's sharply lower close in Chicago, all conspired to drive European markets to fresh lows.

The Russian grain harvest now stands at 17.9 MMT, with average yields up 14% on this time a year ago at 3.53 MT/ha. Wheat accounts for 13.3 MMT of that total off 14.8% of the intended area, with yields of 3.6 MT/ha representing a 12% increase on 2013. Barley accounts for a further 2.4 MMT off 7.4% of the planned area. Russian growers have also harvested 246 TMT of rapeseed off 12.4% of the planned area.

Belarus forecast that they would harvest a record 10 MMT grain harvest this year.

Oil World estimated the 2014 EU-28 rapeseed crop at 22.7 MMT versus a previous estimate of 22.4 MMT and up 7% compared to the 2013 crop of 21.2 MMT.

They see production in Germany at 5.9 MMT versus 5.8 MMT in 2013, with France contributing a further 5.2 MMT, up 18% versus 4.4 MMT a year ago.

The 2014 Polish rapeseed crop this year will amount to 2.8 MMT, the same as last year. The UK will be Europe's fourth largest producing nation with a crop of 2.5 MMT, a 19% rise on 2.1 MMT a year ago, they added.

Grain exports out of the Black Sea are starting to pick up. The Ukraine Ag Ministry said that the country had exported 586,000 MT of grain between Jul 1st – Jul 11th. Russian grain exports for the period Jul 1st - Jul 9th were 466,000 MT.

Ukraine corn was said to be offered at EUR164/tonne CIF Northern Spain for November shipment, that's the equivalent of around GBP131/tonne including shipping costs. Ukraine new crop corn offers FOB the Black Sea are now said to be down to $195/tonne, which is less than GBP115/tonne.

12-07-2014 14:59 PM | EU Reports
11/07/14 -- EU grains closed mostly lower, helped on their way by a late one-two in the guts from the USDA and FAO.

The day ended with new crop Nov 14 London wheat closing GBP1.65/tonne lower at GBP130.55/tonne, Nov 14 Paris wheat was EUR1.25/tonne weaker at EUR180.50/tonne, Aug 14 Paris corn was down EUR1.25/tonne to EUR169.00/tonne and Aug 14 Paris rapeseed was EUR2.25/tonne easier at EUR331.25/tonne.

This was a new lowest close for a front month on both London wheat and Paris rapeseed since July 2010, and the lowest on Paris wheat since December 2011.

For the week Nov 14 London wheat was down GBP3.95/tonne, with Paris wheat falling EUR4.00/tonne, corn losing EUR2.00/tonne and rapeseed falling EUR6.50/tonne.

FranceAgriMer said that the French winter wheat harvest is just about underway, at 2% done nationally as of Jul 7. This time last year nothing had yet been cut. Despite some rain this week, the winter barley harvest advanced from 44% done a week ago to 78% complete as of Monday. A year ago only 4% of the crop had been cut by the end of the first week in July. They also said that 7% of the French corn crop is at the silking stage, up from 1% a week ago and versus zero this time last year.

As far as crop conditions go, they rated 70% of the French winter wheat crop to be in a good/very good state, up a point on a week ago and 2 points ahead of this time last year. The French corn crop was rated 83% good/very good, unchanged on a week ago and far better than only 56% this time in 2013.

Late in the day the USDA raised their estimate for the world wheat crop in 2014/15 by 3.6 MMT from last month to 705.2 MMT.

"This is down 9.0 MMT from last year but still the second largest production on record. The biggest foreign increases are 1.6 MMT for the EU and 1.0 MMT for Ukraine both due to continued favourable weather," they said. Production in the EU is now forecast at 147.9 MMT, a 3.2% increase on last year. Ukraine's crop is now estimated at 21 MMT, down versus 22.3 MT a year ago, but nowhere near as bad a crop as was feared earlier in the year.

World wheat ending stocks in 2014/15 were raised by almost 1 MMT to a plentiful 189.5 MMT, which is more than 5 MMT higher than in 2013/14.

The FAO's OECD meanwhile estimated the global wheat crop in 2014/15 even higher than the USDA, at 710.5 MMT, which they say is 18.4 MMT above the prior 3-year average.

They also forecast the world 2014/15 coarse grain crop at 1.273 billion tonnes versus the previous 3-year average of 1.208 billion and the USDA's 1.261 billion.

"For coarse grains, the production response to the high prices in recent years is expected to be especially strong in the United States, the Russian Federation and Argentina. Global demand will not be able to absorb this supply at current prices," they said.

"Crop prices are expected to drop for one or two more years, before stabilizing at levels that remain above the pre-2008 period, but significantly below recent peaks," they suggested.

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