EU Reports
22-04-2014 19:59 PM | EU Reports
22/04/14 -- EU grains returned from the Easter break looking decidedly unwell, as if having overdosed on chocolate, with wheat under particular pressure following a dismal performance across the pond yesterday.

May 14 London ended down GBP2.65/tonne at GBP167.50/tonne, and new crop Nov 14 slumped GBP4.80/tonne lower to GBP156.70/tonne in high volume trade. May 14 Paris wheat closed down EUR2.75/tonne at EUR214.75/tonne, Jun 14 Paris corn fell EUR3.25/tonne to EUR184.75/tonne and May 14 Paris rapeseed was EUR1.50/tonne easier at EUR422.25/tonne.

The UK was treated to a largely fine Easter break, with a return to more unsettled conditions now due for the rest of the week. Most will welcome the rains, although crop conditions generally look very good anyway at the moment. Toepfer last week forecast the UK wheat crop at 15.1 MMT, a 26.7% rise on last year.

Welcome rain is also forecast across almost all over Europe in the latest 15-day forecast, with all but southern Spain expected to pick up above average totals. A huge area stretching right across almost all of France, Germany, into the western half of Poland and down through the Czech Republic, Slovakia, Hungary and into Romania and Bulgaria will pick up 2-3 times their normal rainfall in the period through to May 7, according to the latest GFS model.

Current estimates have the EU-28 wheat crop around 2% higher this year, with output in France little changed, Poland a little higher and Germany a little lower.

Most of Ukraine is also forecast to pick up beneficial rains, which will aid both winter and newly planted spring grains. Belarus, where early spring grains have been sown on almost 973k ha (or 91.2% of plan), along with just over 300k ha of corn (38% of plan), is also in for decent precipitation totals.

Ukraine exported almost 390 TMT of grains via it's seaports last week, according to APK Inform. Wheat accounted for 154.5 TMT of that total, and corn a further 176.7 TMT. APK Inform expect full season grain exports out of Ukraine to hit a record 31.3 MMT this season, including 19.5 MMT of corn, 9 MMT of wheat and 2.2 MMT of barley. "Exports will not face any significant disruptions," they said, referring to the current political tensions.

Russian spring grain planting has now been completed on 3.7 million ha, or 11.5% of plan. That's up from 2.1 million ha last week and versus 2.8 million ha this time last year. Barley accounts for 2.1 million ha of the total area planted so far.

FranceAgriMer said that 100% of the French winter wheat crop is in ear versus only 60% a year ago at this time. Spring barley emergence is 100% versus 74% this time last year. Corn planting is 39% done versus only 4% at this time in 2013.

Clearly the French harvest is going to be early. Crop conditions are also better than they were 12 months ago, with winter wheat rated 75% good/very good versus 66% this time last year, and winter barley at 73% good/very good compared to 65% a year ago.

India's wheat harvest is underway, but is around 15 days late due to rain. The Ag Ministry there say that cooler than normal temperatures throughout the growing season meant that the crop has ripened more slowly than normal, and that therefore they expect yields to be higher this year. Hail damage was described as "insignificant" by a Ministry spokesman. The government say that they plan to buy 31 MMT of wheat on the domestic market this year versus 25.4 MMT last year. The late harvest though means that they've only purchased 7.5 MMT for the state-owned fund so far this year versus 12 MMT a year ago at this time.

The pound hit a fresh 5-year high against the US dollar today, and hovers close to 1.22 versus the euro. A significant break above that level could see it test the early 2013 high of 1.2340 against the single currency. Both would keep UK corn and wheat imports cheap, and harm new crop wheat export potential.

17-04-2014 18:09 PM | EU Reports
17/04/14 -- EU grains finished a holiday shortened week mixed. There may have been an element of profit-taking to today's trade, after Paris wheat hit 11-month highs earlier in the week, ahead of a 4-day weekend. Who knows what might have happened in Ukraine by the time European markets re-open on Tuesday morning?

Russia's President Putin said that he has a right to send troops into Ukraine, but that he hopes that he does not have to use that right. He's not a man noted for his patience, warning the Ukrainian authorities of "the abyss they're heading into" on Russian TV, after three pro-Russian separatists were killed and a further 13 wounded in fighting in Eastern Ukraine overnight.

May 14 London wheat closed GBP0.10/tonne lower at GBP170.15/tonne, and with new crop Nov 14 London wheat up GBP1.65/tonne at GBP161.50/tonne. May 14 Paris wheat closed EUR1.00/tonne weaker at EUR217.50/tonne, Jun 14 Paris corn was down EUR1.50/tonne at EUR188.00/tonne and May 14 Paris rapeseed fell EUR0.25/tonne to EUR423.75/tonne.

For the week, that puts May 14 London wheat GBP3.15/tonne higher, and with new crop Nov 14 up GBP6.25/tonne. Paris May 14 wheat ended the week EUR7.75/tonne higher than it began it, with Jun 14 corn up EUR1.00/tonne and May 14 rapeseed EUR6.75/tonne firmer.

Strategie Grains increased their forecast for EU-28 soft wheat exports this season by 1.2 MMT to a record 26.8 MMT - Brussels confirmed yesterday that they'd already granted 24.3 MMT worth of soft wheat export licences so far this season. With ten weeks of the 2013/14 season remaining, this estimate means soft wheat exports only need to average 250 TMT/week between now and the end of June, which looks easily achievable.

The French analyst also raised their 2014/15 EU-28 soft wheat export estimate by 0.5 MMT to 22.9 MMT.

On the production side of things, Strategie Grains trimmed 0.5 MMT off its 2014/15 EU-28 soft wheat crop estimate to 137.2 MMT, although that is still 2 MMT more, or 1.5%, than a year ago. The cut was largely due to higher than expected winter losses in Lithuania, they said. The current 2013/14 season's soft wheat ending stocks are seen similar to year ago levels, they added.

They also forecast the EU-28 corn crop at 65.1 MMT, down 100 TMT from last month, but 1% higher than last year. Ukraine new crop corn is attractively priced, which could put European corn prices under downward pressure later in the year, they suggested.

Their EU-28 barley production estimate was raised 0.5 MMT from last month to 55.9 MMT, although that's still a 6% decline on last year's crop which was boosted by unusually high spring barley plantings. This month's increase was partly due to a higher barley acreage estimate in Lithuania following failed winter wheat, they said.

Toepfer forecast the 2014/15 German wheat crop at 23.95 MMT, down 3.7% versus 24.87 MMT last year. They estimated the German rapeseed crop at 5.43 MMT, down 6% versus 5.76 MMT last year.

Sterling rose to it's best levels against the US dollar since August 2009 today, and hit it's highest trade weighted index against a basket of global currencies since late 2008, on the notion that UK interest rates will start to move up again late this year or in the early part of 2015. With the UK looking likely to be returning to a "normal" wheat production year in 2014/15, a strong pound will not be an aid to export ambitions in the season ahead.

17-04-2014 08:39 AM | EU Reports
16/04/14 -- EU grains closed mixed with May 14 London wheat up GBP0.85/tonne to GBP170.25/tonne, and with new crop Nov 14 London wheat closing GBP0.20/tonne weaker at GBP159.85/tonne. May 14 Paris wheat closed EUR2.75/tonne lower at EUR218.50/tonne, Jun 14 Paris corn was up EUR0.25/tonne at EUR189.50/tonne, whilst May 14 Paris rapeseed rose EUR4.25/tonne to close at EUR424.00/tonne.

Paris wheat fell from yesterday's 11-month high on consolidation/profit-taking, whilst old crop London wheat continues to firm on tight availability.

Customs data showed that UK wheat imports fell to only 82 TMT in February, down 68% versus 12 months previously, and the smallest monthly volume since June 2012.

That takes UK wheat imports for the season so far to 1.55 MMT versus 1.87 MMT this time a year ago.

The data also shows that February UK corn imports were 172.5 TMT, taking the 2013/14 marketing year to date import total to 1.61 MMT, up 45% versus 1.11 MMT at the same point in 2012/13.

The German Farmers Co-operative raised their forecast for the 2014 wheat crop there by 100 TMT from last month to 24.74 MMT, although that's still a 1% fall on last year's production.

They trimmed slightly their 2014 rapeseed production forecast from 5.57 MMT to 5.54 MMT, a 3.9% decline versus 2013.

"Plants are in an overall good condition," they said, noting that recent rain has alleviated some winter dryness concerns.

EU wheat exports are finally showing signs of slowing down a little. Brussels granted 412 TMT worth of soft wheat export licences this past week, down from 585 TMT a week previously and 596 TMT the week prior to that. Corn import licences meanwhile outstripped those for wheat imports at 497 TMT this past week, up from 347 TMT a week previously and versus 391 TMT for the previous week.

Total EU soft wheat exports for the marketing year to date now stand at a record 24.3 MMT, up 49% versus a year ago. Corn imports are at 11.3 MMT, a 23% rise on last season.

Jordan bought 100 TMT of optional origin feed barley in a tender for Jun/Jul shipment.

16-04-2014 08:19 AM | EU Reports
15/04/14 -- EU grains closed generally firmer, with. May 14 London ending GBP0.15/tonne higher at GBP169.40/tonne, and new crop Nov 14 finishing the day GBP1.30/tonne higher at GBP160.05/tonne. May 14 Paris wheat closed up EUR7.25/tonne at EUR221.25/tonne, Jun 14 Paris corn was up EUR0.25/tonne to EUR189.25/tonne and May 14 Paris rapeseed was EUR3.25/tonne higher at EUR419.75/tonne.

This was the highest close for a front month on Paris wheat since last May.

Once again fresh fundamental news was relatively lacking, the recent rally seems to be mostly about speculative money moving into grains on the back of the Ukraine situation.

One report I read yesterday also suggested that "fund managers believe that the weather problems in 3 out of the past 4 years will again surface this summer and no one wants to miss it."

How things have changed, 2013 ended with fund money staging their longest unbroken exodus from the grains market, and now they are piling back into it.

Chicago fund corn positions "went from short 50k just a couple of months ago to long 250k currently on not much news and corn rallied $1.00. Just think what will happen if we get a normal weather pattern. Funds could actually flip their corn position," one analyst observed.

Current spring grain plantings in the FSU are well advanced versus a year ago. Russia is planted on 2.1 million ha (6.4% of plan) versus 1.9 million this time last year. Belarus is done on 900k ha compared to only 6.5k ha this time in 2013. Late last week the Ukraine Ministry said that they were almost done planting early spring grains (excluding corn etc).

APK Inform left their estimate for grain production in Ukraine unchanged at 57.3 MMT, despite a "worsening political situation", although that's still a 9% decrease on last year's record. They have winter grain output at 21.8 MMT versus 25.4 MMT last year, and the spring crop at 35.5 MMT compared to 37.7 MMT last year.

The Ukraine Ministry said that the country had exported almost 28.5 MMT of grains so far this season, up 35% on a year ago, including 8 MMT of wheat, 2.15 MMT or barley and over 18 MMT of corn.

Egypt said that they have enough wheat bought to last them through to Jun 19.

Jordan bought 150 TMT of wheat for Jul/Aug shipment. Although the origin is optional, the wheat is most likely to come from the Black Sea, with one of the two sellers being Romanian.

The bulls would like to say that the recent rally is only returning the market to "more realistic" levels. Buyers would argue that but for the intervention of Big Bad Vlad we'd now be below £150/tonne on new crop London wheat.

Which viewpoint ultimately proves to be correct only time will tell. Certainly predicting where we will be as regards to Ukraine is concerned a few months from now is a very difficult one to call. It should be remembered though that this is a spec-led rally that has little to do with current fundamentals of supply and demand.

A sudden piece of unexpectedly bad news, China maybe the most likely culprit to supply it, could spark another mass exodus from the recently built large spec longs that fund money now holds in wheat, corn and soybeans.

On the other hand, another serious summer drought in the US could ignite and even larger "feeding frenzy" than the one we've just seen. The casino mentality continues....

14-04-2014 18:49 PM | EU Reports
14/04/14 -- EU grains finished mostly higher as tensions in Ukraine escalated to new heights over the weekend. The arrival of a 7 am (London time) deadline for pro-Russian activists to vacate official premises seized in the east of the country over the weekend, or face military eviction, came and went. Moscow denied that Russian agents were provoking civil unrest in the area, and repeated the same lines about "protecting the lives of it's citizens" that were used to justify the annexation of Crimea.

May 14 London wheat closed GBP2.25/tonne firmer at GBP169.25/tonne, and with new crop Nov 14 London wheat up GBP3.50/tonne at GBP158.55/tonne. May 14 Paris wheat closed EUR4.25/tonne higher at EUR214.00/tonne, Jun 14 Paris corn was up EUR2.00/tonne at EUR189.00/tonne and May 14 Paris rapeseed fell EUR0/50/tonne to EUR416.50/tonne.

The news out of Ukraine overshadowed everything else, not that there was that much of anything else fresh today, and US wheat futures shot higher in early trade with EU grains following suit and staying there.

This is again all about speculation, whilst for now at least exports out of Ukraine continue more or less unhindered. It is also interesting to see wheat as the main beneficiary (just as it was when the invasion of Crimea began), when corn is possibly more at risk from production losses due to reduced plantings/input cut-backs than wheat.

APK Inform reported that Ukraine's seaports had shipped out almost 550 TMT of grains last week, although down on 619 TMT the week before, that's still a respectable volume. That total included 462.6 TMT of corn and 84.3 TMT of wheat.

Year to date Ukraine exports are now at 28.338 MMT, versus just over 20 MMT this time a year ago. That includes almost 18 MMT of corn and nearly 8 MMT of wheat.

Full season Ukraine exports are currently expected to be around 33 MMT.

Russia's grain exports meanwhile totalled 641 TMT in the Apr 1-9 period, most of which (549 TMT) was wheat. Year to date exports are now just under 21.5 MMT, a 47.5% increase on last season, including nearly 16 MMT of wheat, over 3 MMT of corn and over 2 MMT of barley.

SovEcon today estimated Russia’s grain exports this season at 25.0 MMT versus a previous estimate of 24.2 MMT

Closer to home, the EU Commission's MARS unit forecast 2014 EU soft wheat yields at 5.58 MT/ha, down 1.6% on last year, but 2.7% above the 5-year average. Barley yields were estimated at 4.49 MT/ha, down 4.9% on last year, but up 2.7% on the 5-year average. OSR yields were seen at 3.05 MT/ha, up 1.3% versus 2013 and 2.7% above the 5-year average.

On a UK specific level they forecast wheat yields here at 7.74 MT/ha, up 4.9% versus 2013. Barley yields were estimated at 5.69 MT/ha, down 2.7%, and rapeseed yields at 3.41 MT/ha, up 18.3%.

"In eastern France and England, the crops’ demand for water is still being met by soil water reserves, which were replenished at the beginning of the winter season. However, top-soils are drying out, and the spring crops sowing/ emergence will be negatively impacted if the precipitation deficit continues," they said.

In Germany, "March was one of the warmest and driest in our historical time series. Crop development is advanced with good leaf area expansion, but rain is now needed to sustain crop growth in the coming weeks," they added.

In Ukraine, "the exceptionally dry conditions in central Ukraine may affect yields of winter cereals. Winter wheat yields forecasts are below the 5-year average," they noted.

12-04-2014 16:19 PM | EU Reports
11/04/14 -- EU grains closed mixed but mostly lower to end the week, but still managed net gains for the week as a whole.

The day ended with May 14 London wheat down GBP0.45/tonne to GBP167.00/tonne, and with new crop Nov 14 London wheat closing GBP0.75/tonne weaker at GBP155.25/tonne. May 14 Paris wheat closed EUR1.50/tonne higher at EUR209.75/tonne, Jun 14 Paris corn was down EUR1.25/tonne at EUR187.00/tonne, whilst May 14 Paris rapeseed rose EUR1.50/tonne to close at EUR417.00/tonne.

For the week that's puts May 14 London wheat GBP3.55/tonne higher, and new crop Nov 14 up GBP3.30/tonne. May 14 Paris finished the week EUR3.25/tonne higher than last Friday, with Jun 14 corn up EUR2.75/tonne and May 14 rapeseed EUR8.25/tonne firmer.

French crop maturity remains well advanced compared to last year, with 96% of the nation's winter wheat crop now displaying an ear of at least 1cm long versus only 32% this time in 2013. All the country's winter barley is at that stage, compared also to only 32% a year ago. Spring barley emergence is 94% versus 45% a year ago, and corn planting is 12% done, up 10 points in a week and compared to only 1% this time last year.

As far as crop conditions go, FranceAgriMer said that 75% of the French winter wheat crop is good to very good, unchanged from last week and 11 points ahead of last year. French winter barley is also 75% good/very good versus 65% this time last year. Spring barley is rated 80% good/very good versus 78% a year ago.

The French oilseed growers group FOP estimated the rapeseed crop there this year at 5.0-5.2 MMT, a 14-18% rise on last year's 4.4 MMT.

Egypt's GASC bought 230 TMT of wheat from May 1-10 shipment at around $300/tonne including freight. Romania will supply two cargoes and Ukraine and Russia one each. French and US wheat was uncompetitive.

Reuters reported that two vessels carrying Russian wheat to Egypt had been delayed due to difficulties obtaining Letters of Credit. Chinese soybean buyers are said to be having similar problems.

India said that it is picking up best bids at around $284-285/tonne in various tenders to sell wheat from it's government owned stockpile.

Algeria bought 450,000 MT of optional origin milling wheat for June shipment. France is typically the most likely supplier.

Ukraine said that it has exported 28.34 MMT of grains so far this season, including 7.93 MMT of wheat, 17.97 MMT of corn and 2.15 MMT of barley. The Ministry said that there's a further 1.13 MMT of grain portside waiting to load, and an additional 28 TMT already loaded and about to leave. Full season exports are expected to be a record 33 MMT.

The European Parliament look set to grant Ukraine special status to export not just corn, but also wheat and barley into the EU under duty-free quotas, in an effort to "cement Kiev's historic shift away from Russia" - according to a report on Reuters. The move could trigger buying interest for wheat from the likes of Spain, say Agritel. They would of course normally be one of the main export homes for UK wheat.

Russia said that they had planted 1.5 million hectares of early spring grains, or 4.7% of intentions, which is around double the area planted a year ago at this time. Russia's corn seed imports in March were said to be 42% higher than a year ago. Ukraine early spring planting is almost complete, and Belarus is past three quarters done.

Brussels announced 585 TMT of soft wheat export licences this week, along with import licences for 347 TMT of corn.

The market will soon start to focus on harvest 2014, which looks like coming early for many across Europe and in the Black Sea area.

12-04-2014 16:19 PM | EU Reports
11/04/14 -- EU grains closed mixed but mostly lower to end the week, but still managed net gains for the week as a whole.

The day ended with May 14 London wheat down GBP0.45/tonne to GBP167.00/tonne, and with new crop Nov 14 London wheat closing GBP0.75/tonne weaker at GBP155.25/tonne. May 14 Paris wheat closed EUR1.50/tonne higher at EUR209.75/tonne, Jun 14 Paris corn was down EUR1.25/tonne at EUR187.00/tonne, whilst May 14 Paris rapeseed rose EUR1.50/tonne to close at EUR417.00/tonne.

For the week that's puts May 14 London wheat GBP3.55/tonne higher, and new crop Nov 14 up GBP3.30/tonne. May 14 Paris finished the week EUR3.25/tonne higher than last Friday, with Jun 14 corn up EUR2.75/tonne and May 14 rapeseed EUR8.25/tonne firmer.

French crop maturity remains well advanced compared to last year, with 96% of the nation's winter wheat crop now displaying an ear of at least 1cm long versus only 32% this time in 2013. All the country's winter barley is at that stage, compared also to only 32% a year ago. Spring barley emergence is 94% versus 45% a year ago, and corn planting is 12% done, up 10 points in a week and compared to only 1% this time last year.

As far as crop conditions go, FranceAgriMer said that 75% of the French winter wheat crop is good to very good, unchanged from last week and 11 points ahead of last year. French winter barley is also 75% good/very good versus 65% this time last year. Spring barley is rated 80% good/very good versus 78% a year ago.

The French oilseed growers group FOP estimated the rapeseed crop there this year at 5.0-5.2 MMT, a 14-18% rise on last year's 4.4 MMT.

Egypt's GASC bought 230 TMT of wheat from May 1-10 shipment at around $300/tonne including freight. Romania will supply two cargoes and Ukraine and Russia one each. French and US wheat was uncompetitive.

Reuters reported that two vessels carrying Russian wheat to Egypt had been delayed due to difficulties obtaining Letters of Credit. Chinese soybean buyers are said to be having similar problems.

India said that it is picking up best bids at around $284-285/tonne in various tenders to sell wheat from it's government owned stockpile.

Algeria bought 450,000 MT of optional origin milling wheat for June shipment. France is typically the most likely supplier.

Ukraine said that it has exported 28.34 MMT of grains so far this season, including 7.93 MMT of wheat, 17.97 MMT of corn and 2.15 MMT of barley. The Ministry said that there's a further 1.13 MMT of grain portside waiting to load, and an additional 28 TMT already loaded and about to leave. Full season exports are expected to be a record 33 MMT.

The European Parliament look set to grant Ukraine special status to export not just corn, but also wheat and barley into the EU under duty-free quotas, in an effort to "cement Kiev's historic shift away from Russia" - according to a report on Reuters. The move could trigger buying interest for wheat from the likes of Spain, say Agritel. They would of course normally be one of the main export homes for UK wheat.

Russia said that they had planted 1.5 million hectares of early spring grains, or 4.7% of intentions, which is around double the area planted a year ago at this time. Russia's corn seed imports in March were said to be 42% higher than a year ago. Ukraine early spring planting is almost complete, and Belarus is past three quarters done.

Brussels announced 585 TMT of soft wheat export licences this week, along with import licences for 347 TMT of corn.

The market will soon start to focus on harvest 2014, which looks like coming early for many across Europe and in the Black Sea area.

11-04-2014 08:59 AM | EU Reports
10/04/14 -- EU grains closed mostly a little lower, although May 14 London wheat bucked the trend closing GBP1.30/tonne higher at GBP167.45/tonne, new crop Nov 14 ended the day GBP0.15/tonne lower at GBP156.00/tonne. May 14 Paris wheat closed down EUR0.75/tonne at EUR208.25/tonne, Jun 14 Paris corn was EUR0.50/tonne lower to EUR188.25/tonne and May 14 Paris rapeseed was unchanged at EUR415.50/tonne.

The hangover from last night's USDA report, which came in bearish for wheat, was carried over into today's session. Forecasts for rain winter wheat on the US Plains this weekend, and more to come in the second half of next week, added to the bearish tone.

Early spring grains planting in Ukraine are off to a flyer, despite the problems with Russia. The Ukraine Ministry today reported plantings were completed on 2.77 million hectares - which is just about the entire forecast area and a more than fourfold increase on this time a year ago.

Sterling strength caps upside potential for UK wheat. Whilst we might not have anything to export this year, we certainly will in 2014/15. The pound traded close to 1.68 against the US dollar today - it's best level since August 2009 - following a statement from the US Federal Reserve saying that interest rates in the States would remain "very low" for a considerable time to come. Sterling's gains were trimmed a little as the Bank of England left UK interest rates on hold, and where they've been since March 2009, at 0.5%.

Some expect that UK interest rates will start to edge higher by mid-2015, and possibly even later this year, with sterling forecast by Citibank to hit 1.70 against the dollar and 1.25 versus the euro in Q4 of 2014.

That could keep corn imports continuing awhile yet, to the detriment of wheat prices and export potential in 2014/15.

Fears for the Chinese economy and the country's "unsustainable" growth have been around for so long that we've maybe become complacent about them, just as were were about house prices, subprime and the dotcom boom.

Reuters reported today that 5-6 soybean vessels are sat portside in China, unable to unload due to difficulties with buyers obtaining Letters of Credit from the banks. There's a further similar number en-route to China that may also face a similar fate, they said.

With fund money now sitting on a very large speculative long in soybeans and corn in Chicago, the last thing the market needs is to start hearing of Chinese defaults. A major fund sell-off, should it come, would leave the soybean market vulnerable to significant downside. A steep fall in prices is not an unimaginable scenario (US farmers are of course about to plant a record soybean crop of their own in 2014, and Brazilian growers look set to do likewise later on in the year), and one that would only spark further defaults driving prices even lower.

In the event of such a scenario playing out, it would be difficult to imagine wheat prices rising, at least not without the help of a significant weather-related problem somewhere around the world. Particularly so in the UK if the pound continues to firm once we start bringing in a crop which is hoped to be in the region of 15 MMT whilst we're up to our necks in imported corn.

It was spec money that got us where we are today, following Big Bad Vlad's move on Crimea. It was nothing to do with end-user demand (and maybe only a little related to drought on the US Plains). What happens if the "smart money" suddenly decides that it wants out (again) is not too difficult to forecast.

10-04-2014 07:19 AM | EU Reports
09/04/14 -- EU grains finished mostly higher on the day heading into the USDA's WASDE report, although May 14 London wheat closed GBP1.35/tonne lower at GBP163.45/tonne, with Tuesday's GBP3.85/tonne higher close probably a bit false. New crop Nov 14 London wheat closed up GBP0.40/tonne at GBP156.15/tonne. May 14 Paris wheat closed EUR0.75/tonne higher at EUR209.00/tonne, Jun 14 Paris corn was up EUR2.50/tonne at EUR188.75/tonne and May 14 Paris rapeseed rose EUR2.25/tonne to EUR415.50/tonne.

Ahead of the USDA report fresh news was fairly scant, but last night's confirmation that the US winter wheat crop has declined significantly across the winter was enough to convince the bulls.

It's difficult to know what to make of this news. On the bare face of it, headlines like "US wheat crop in worst condition in 12 years" reads bullish. Indeed, crop ratings for US winter wheat ARE the worst in 12 years, at 35% good/excellent against 62% at the end of November that's a pretty steep decline. However, at 35% they are only down on last year by just one percentage point, and wheat prices did nothing but fall in 2013.

News of further skirmishes in Ukraine with pro-Russian activists seems to be encouraging the spec element back into the market.

Despite that, Ukraine early spring grain plantings are almost 90% done, and my agronomist chum over there, Mike Lee, says that the winter "drought" might not necessarily be such a bad thing. It will after all encourage strong root growth, he notes.

Russian spring grains are planted on 1.3 million hectares, according to the Ministry there, or 4.2% of plan. That's well up on only 775k ha this time a year ago.

The normally conservative Russian Grain Union estimated 2014 grain production there at 90 MMT. They said that around 4.9% of winter grains will need replanting, down from a previous forecast of 6% and better than the norm which would be around 8-10%.

The USDA's FAS in Moscow estimated the 2014 Russian grain crop at 91 MMT, down 1 MMT on last year. Wheat production will account for 52 MMT of that, virtually the same as last year, with the barley crop at 16 MMT and corn output at 11 MMT, they added.

They see Russia's 2014/15 grain export potential at 24 MMT, virtually unchanged on this season. Wheat exports may rise 0.5 MMT to 18 MMT, and 2014/15 grain ending stocks should be more or less unchanged at 9 MMT, they added.

Rusagrotrans forecast the nation's April grain exports at 1.8 MMT versus 2.015 MMT in March. Full season 2013/14 exports could reach 25.1 MMT, up from a previous forecast of 24.3 MMT, they added.

The French Ministry said that spring barley plantings there would decline 3.2% on last year to 480k ha. The all barley area however will rise 3% to 1.69 million ha, they suggested. All wheat plantings will be up marginally, by 0.6%, to 5.02 million ha, they added.

French soft wheat exports in February totalled 1.9 MMT (of which 1.3 MMT went to non-EU destinations). Year to date exports to non-EU homes are 8.2 MMT, up 18% on a year ago. FranceAgriMer said that total 2013/14 soft wheat exports to non-EU buyers would be 11.4 MMT, up 15% from a year ago.

French wheat exports within the EU however are seen lower at 6.6 MMT versus a previous estimate of 6.7 MMT and down 8.5% from a year ago.

That puts France's 2013/14 soft wheat ending stocks at 3.3 MMT versus a previous estimate of 3.2 MMT, and up 12.5% from a year ago.

Algeria are tendering for optional origin milling wheat for May delivery. France are usually their preferred supplier.

The USDA's FAS in Algeria said that decent winter rains mean that they could harvest 3.5 MMT of wheat this year, versus 3.3 MMT in 2013. Their 2014 barley crop should be virtually unchanged at 1.5 MMT, they added. Algeria's import needs are expected to remain static at 6.4 MMT of wheat and 0.46 MMT of barley, they said.

Late in the day, the USDA's April WASDE report came in bearish for wheat with world ending stocks pegged 3 MMT above trade expectations at 186.7 MMT.

10-04-2014 07:09 AM | EU Reports
09/04/14 -- EU grains finished mostly higher on the day heading into the USDA's WASDE report, although May 14 London wheat closed GBP1.35/tonne lower at GBP163.45/tonne, with Tuesday's GBP3.85/tonne higher close probably a bit false. New crop Nov 14 London wheat closed up GBP0.40/tonne at GBP156.15/tonne. May 14 Paris wheat closed EUR0.75/tonne higher at EUR209.00/tonne, Jun 14 Paris corn was up EUR2.50/tonne at EUR188.75/tonne and May 14 Paris rapeseed rose EUR2.25/tonne to EUR415.50/tonne.

Ahead of the USDA report fresh news was fairly scant, but last night's confirmation that the US winter wheat crop has declined significantly across the winter was enough to convince the bulls.

It's difficult to know what to make of this news. On the bare face of it, headlines like "US wheat crop in worst condition in 12 years" read bullish. Indeed, crop ratings for US winter wheat ARE the worst in 12 years, at 35% good/excellent against 62% at the end of November that's a pretty steep decline. However, at 35% they are only down on last year by just one percentage point.

News of further skirmishes in Ukraine with pro-Russian activists seems to be encouraging the spec element back into the market.

Despite that, Ukraine early spring grain plantings are almost 90% done, and my agronomist chum over there, Mike Lee, says that the winter "drought" might not necessarily be such a bad thing. It will after all encourage strong root growth, he notes.

Russian spring grains are planted on 1.3 million hectares, according to the Ministry there, or 4.2% of plan. That's well up on only 775k ha this time a year ago.

The normally conservative Russian Grain Union estimated 2014 grain production there at 90 MMT. They said that around 4.9% of winter grains will need replanting, down from a previous forecast of 6% and better than the norm which would be around 8-10%.

The USDA's FAS in Moscow estimated the 2014 Russian grain crop at 91 MMT, down 1 MMT on last year. Wheat production will account for 52 MMT of that, virtually the same as last year, with the barley crop at 16 MMT and corn output at 11 MMT, they added.

They see Russia's 2014/15 grain export potential at 24 MMT, virtually unchanged on this season. Wheat exports may rise 0.5 MMT to 18 MMT, and 2014/15 grain ending stocks should be more or less unchanged at 9 MMT, they added.

Rusagrotrans forecast the nation's April grain exports at 1.8 MMT versus 2.015 MMT in March. Full season 2013/14 exports could reach 25.1 MMT, up from a previous forecast of 24.3 MMT, they added.

The French Ministry said that spring barley plantings there would decline 3.2% on last year to 480k ha. The all barley area however will rise 3% to 1.69 million ha, they suggested. All wheat plantings will be up marginally, by 0.6%, to 5.02 million ha, they added.

French soft wheat exports in February totalled 1.9 MMT (of which 1.3 MMT went to non-EU destinations). Year to date exports to non-EU homes are 8.2 MMT, up 18% on a year ago. FranceAgriMer said that total 2013/14 soft wheat exports to non-EU buyers would be 11.4 MMT, up 15% from a year ago.

French wheat exports within the EU however are seen lower at 6.6 MMT versus a previous estimate of 6.7 MMT and down 8.5% from a year ago.

That puts France's 2013/14 soft wheat ending stocks at 3.3 MMT versus a previous estimate of 3.2 MMT, and up 12.5% from a year ago.

Algeria are tendering for optional origin milling wheat for May delivery. France are usually their preferred supplier.

The USDA's FAS in Algeria said that decent winter rains mean that they could harvest 3.5 MMT of wheat this year, versus 3.3 MMT in 2013. Their 2014 barley crop should be virtually unchanged at 1.5 MMT, they added. Algeria's import needs are expected to remain static at 6.4 MMT of wheat and 0.46 MMT of barley, they said.

Late in the day, the USDA's April WASDE report came in bearish for wheat with world ending stocks pegged 3 MMT above trade expectations at 186.7 MMT.

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