22 May 2015 | Online since 2003


EU Reports

22 May 2015 | EU Reports
21/05/15 -- EU grains closed mostly higher, as US wheat futures rose anew as heavy rains of "biblical proportions" batter US winter wheat on the Plains immediately prior to harvesting.

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 that.

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.



21 May 2015 | EU Reports
20/05/15 -- EU grains closed mixed with May 15 London wheat down GBP0.35/tonne at GBP109.70/tonne, Sep 15 Paris wheat was EUR2.25/tonne firmer at EUR180.50/tonne, Jun 15 Paris corn was down EUR0.75/tonne at EUR154.00/tonne and Aug 15 Paris rapeseed rose EUR2.00/tonne to EUR359.75/tonne.

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, they said.

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.



20 May 2015 | EU Reports
19/05/15 -- EU wheat gave up some of yesterday's gains, as US futures turned lower despite ongoing concerns over rains pounding US winter wheat on the Southern Plains.

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, they added.

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.



19 May 2015 | EU Reports
18/05/15 -- EU grains began the week trading higher across the board, with wheat posting the biggest gains on what was probably a combination of nervous short-covering and bargain hunting.

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 season.

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 TMT.

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.



16 May 2015 | EU Reports
15/05/15 -- EU grains closed mostly lower on the day and mixed, but little changed, for the week.

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 believe.

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.



15 May 2015 | EU Reports
14/05/15 -- Wheat rebounded from recent losses to close with decent gains on short-covering/bargain hunting. Corn was also higher, but only to the tune of a euro or two, and rapeseed closed a little lower.

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% planted.

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.



14 May 2015 | EU Reports
13/05/15 -- EU grains closed mostly lower, with both the pound and euro firming against a suddenly weaker US dollar.

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.



13 May 2015 | EU Reports
12/05/15 -- EU grains closed mixed, but mostly with little change, save for rapeseed which closed with losses of around EUR2.00-4.00/tonne.

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 at EUR356.25/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 ahead.

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 2015/16.

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 HGCA.



12 May 2015 | EU Reports
11/05/15 -- EU grains closed mixed, mostly higher in Paris and lower in London after the pound rose to its best finish against the US dollar since before Christmas and was also higher versus the euro.

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 vibe.

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 pace.

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 recent average.



10 May 2015 | EU Reports
08/05/15 -- EU grains closed mixed. London wheat was lower across the board following a sharp rally in sterling after it became clear that an outright Conservative win in the General Election was likely. None of this hung parliament or coalition nonsense.

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 year ago.

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 carried.

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.




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