EU Reports
25-10-2014 10:59 AM | EU Reports
24/10/14 -- EU grains closed mostly lower, and at or near session lows in wheat and rapeseed, at the end of a very choppy session. Good early gains were completely wiped out in late in the day selling after US grains turned red in end of week consolidation.

Wheat on both sides of the Channel, plus Paris corn and rapeseed all still managed to post weekly gains however.

The day ended with Nov 14 London wheat down GBP0.20/tonne at GBP119.80/tonne, Nov 14 Paris wheat was down EUR4.50/tonne at EUR165.75, Nov 14 corn was EUR1.25/tonne lower at EUR144.50/tonne and Nov 14 rapeseed fell EUR0.75/tonne to EUR323.00/tonne.

For the week, London wheat was still GBP3.35/tonne higher though, with Paris wheat adding EUR5.75/tonne, corn EUR2.00/tonne and rapeseed gaining EUR1.00/tonne.

Much of the early excitement surrounded warnings from SovEcon that Russian crop prospects for 2015 are already looking shaky. Whilst the Russian Ministry say that autumn winter grain sowing is now 98.5% complete on 16.3 million hectares (compared to 13.8 million this time a year ago), SovEcon say that the condition of these crops is "extremely weak".

A hard winter could therefore lead to much higher levels of winterkill than normal. Meanwhile the weakness of the rouble means that domestic prices of spring seed and other inputs are rising rapidly, which could also have a negative impact on spring cropping plans, and fertiliser/pesticide applications next year.

This currency weakness is also encouraging farmers to hold onto their 2014 crops as a hedge against the falling value of the rouble.

SovEcon said that grain production in Russia next year could ultimately fall below 90 MMT, with the wheat crop slipping under the 50 MMT mark.

The Russian Ministry say that the 2014 grain harvest is 94.4% complete on 42.6 million hectares, producing a crop of 106.7 MMT to date. Wheat accounts for 61.1 MMT of that total, with barley adding an extra 21 MMT. Both those harvests are almost done. There's still a quarter of this year's corn still out in the fields though. That harvest total to date stands at 9.1 MMT.

The Urals region is the main area left with a large area still unharvested, with almost 27% of crops there still to be cut compared to around 9% a year ago.

Nov 14 London wheat hit GBP122.00/tonne earlier in the session, a level not seen since the last day of August. Nov 14 Paris wheat touched GBP172.00/tonne, a near 7 week high. Although the market ultimately gave up all of these gains, these Russian jitters are unlikely to have gone away. The market will be acutely aware that Russia has seen two crop disasters in the last 5 years, both of which have largely been responsible for sending London wheat to over GBP200/tonne.

EU soft wheat exports meanwhile continue to beat even last season's record pace. Brussels issued 646 TMT worth of soft wheat export licences this past week, taking the cumulative marketing year total to 9.1 MMT, an 8% rise compared to a year ago. Remember that the EU Commission sees final soft wheat exports down by almost 17% in 2014/15 versus last season's record.

Societe General forecast French soft wheat sowings at 4.98 million hectares, with those in Germany at 3.23 million, for the 2015 harvest. Both figures are almost identical to plantings last year.

FranceAgriMer said that the 2014 French corn harvest was 38% complete as of Monday, double what it was the previous week, and well ahead of only 14% done this time a year ago. Early yield reports are generally very good.

They said that the French winter wheat crop is 55% planted versus 34% a week ago and 51% a year ago. The crop is 34% emerged against 18% last week and 31% a year ago. The French winter barley crop is 80% sown, up from 55% a week ago and 5 points ahead of this time last year.

24-10-2014 08:59 AM | EU Reports
23/10/14 -- EU grains closed mixed, but mostly higher. Front month Nov 14 Paris wheat closed at a EUR0.75/tonne premium to the Jan 15 contract. A week ago, and the day before margin calls on short positions in it were doubled, it was at a discount of EUR4.50/tonne. As contract expiry draws nearer (on Nov 10) we can expect to see further erratic behaviour from the front month.

The day ended with Nov 14 London wheat up GBP1.00/tonne to GBP120.00/tonne, Nov 14 Paris wheat closed EUR2.50/tonne firmer at EUR170.25/tonne, Nov 14 Paris corn was up EUR2.75/tonne to EUR145.75/tonne, whilst Nov 14 Paris rapeseed was EUR0.50/tonne higher at EUR323.75/tonne.

Following much criticism, Euronext announced today that its milling wheat futures benchmark will adopt new specifications taking effect with the September 2017 contract month. The new fixed specification will be a minimum of 11% protein (on a dry matter basis), hagberg falling numbers of a minimum 220 and a minimum bushel weight of 76kg/hl.

"Euronext also welcomes the decision that the accredited delivery silo operated by Socomac will adopt exactly the same 2014 protein content and Hagberg falling number requirements in its General Terms & Conditions as Sénalia for wheat for the 2015 and 2016 crop years," they also said.

The Ukraine Ag Ministry forecast winter grain plantings at 7.5 million hectares, including 6.2 million ha of wheat. They said that planting of the latter is now 96% complete.

APK Inform estimated that around 5% of crops in the troubled Donetsk region of Ukraine will go unharvested, along with around 25% of the area around Lugansk. In total that equates to production of around 530 TMT, they said. They also figure that around 25-30% of the sunflower crops in these areas will remain unharvested, the equivalent of around a further 3-400 TMT.

Rusagrotrans forecast Russia's October grain exports at 3.5-3.6 MMT, up from a previous estimate of 3.3-3.4 MMT, and a record for the month. They said that Russia had already shipped 1.78 MMT of grains in the first half of the month, of which 72% was wheat, 18% barley and 9% corn.

Whilst winter grain planting in Russia is nearing completion, concerns remain that earlier dryness means that crops are under-developed heading into winter dormancy. A sharp cold snap over the next few days, with temperatures forecast to dip as low as 20-25 F even in southern parts of the country, could cause some damage. "Crops have not yet reached the stage of development in which they can face these temperatures easily," said Agritel.

MDA CropCast raised their forecast for the EU wheat crop by 2.5 MMT from last week, also upping corn production here by 2.1 MMT and increasing their outlook on European barley output by a similar amount. They also forecast increases for Russian barley (+2.9 MMT) and corn (+0.7 MMT), along with a smaller rise in wheat (+0.6 MMT) and barley (+0.4 MMT) in Ukraine.

They seemed relatively unmoved by suggestions that all is not well with the Australian wheat crop, leaving their production estimate unchanged from a week ago at 24.04 MMT. Widespread rains in WA have slowed wheat drydown somewhat, they said. Meanwhile drier weather elsewhere in the country has been favourable for crop maturation, they added.

With the US harvest running late, Societe General said that there could still be time for "one last leg down in corn prices" if and when the pace picks up. Any downside would however be short-lived, citing strong demand and reduced plantings in South America, they said.

Good yield reports coming from the French harvest could eventually boost corn production there past the 17 MMT mark, it is thought. That would be a record harvest for them, further stretching logistics and storage capacity already weighed down by the large and varied quality of the 2014 wheat crop and sluggish exports.

23-10-2014 08:49 AM | EU Reports
22/10/14 -- EU grains finished higher across the board, with both London and Paris wheat managing their best closes in 6 weeks. However "although particular factors are lending support to prices, markets are very unlikely to see a significant rally," said the HGCA.

The day ended with Nov 14 London wheat up GBP2.50/tonne to GBP119.00/tonne, Nov 14 Paris wheat ended EUR3.75/tonne firmer at EUR167.75/tonne, Nov 14 Paris corn rose EUR0.50/tonne to EUR143.00/tonne, whilst Nov 14 Paris rapeseed was EUR3.00/tonne higher at EUR323.25/tonne.

The spread between Nov 14 and Jan 15 Paris wheat narrowed for a third day as more nearby shorts are squeezed out. Even so, the open interest in the front month is still large given that contract expiry is only 2 1/2 weeks away.

A partial success for France in last night's Egyptian tender was supportive, even if they did have to share the business with Russia and Romania.

It also confirms that the latter two origins still have wheat to sell, even if they were priced well over the winning French origin bid. That was at least $10/tonne under the other remaining FOB quotes out of France, and the different between those and the successful Black Sea quotes were much closer.

Rosstat said that Russia had exported 16.8 MMT of grain in the Jan-Sep period, almost double the volume shipped out twelve months previously. Wheat accounts for 12.6 MMT of that total, with corn adding a further 2.4 MMT and barley an extra 1.5 MMT.

Rusagrotrans forecast the Russian winter grains planted area at 16.3 million hectares, up more than 7% on last year. They said that this would be similar to the area planted for the 2008 record harvest, although obviously there's a long way to go yet.

Nevertheless, they became the first analyst to dip their toe in the water of 2015, issuing a preliminary grain production estimate for next year of 96-104 MMT.

A sharp cold snap is now in the forecast for Russia (and Ukraine) this week. There's some chatter that although the winter crop has been sown in a timely manner, development has been retarded due to lack of moisture. That's only arrived in the past week, leaving the crop little time to develop before these freezing temperatures come along.

That could have a negative impact on production next year, although it's far to early to see this as a significantly bullish factor at the moment, it warrants keeping an eye on.

The Ukraine wheat crop in 2014 totalled 23.7 MMT, say the Ag Ministry there, a 6.3% rise compared to last year. They say that the proportion of the crop suitable for milling is only 54% versus 75% a year ago.

They see wheat exports in 2014/15 at 11.76 MMT, a 28% rise year-on-year.

Agritel say that the Ukraine corn harvest is progressing quickly and has now reached 15.4 MMT. A crop of 27 MMT is expected this year, according to the Ukrainian Agrarian Confederation.

22-10-2014 08:19 AM | EU Reports
21/10/14 -- EU grains closed higher. Nov 14 Paris wheat again posted better gains than the deferred contracts, as seemingly more shorts get squeezed out. The Nov 14/Jan 15 differential was EUR4.50/tonne on Friday when the increased front month margin calls were announced, and tonight that's narrowed to EUR2.75/tonne.

Certainly there will be some shorts on the Nov 14 London contract intending to delivery against it, as thankfully we have more than a just couple of futures stores here in the UK!

Nov 14 London wheat finished up GBP1.00/tonne at GBP116.50/tonne, Nov 14 Paris wheat was up EUR4.25/tonne at EUR164.00/tonne, Nov 14 Paris corn was EUR1.50/tonne higher at EUR142.50/tonne and Nov 14 Paris rapeseed rose EUR2.50/tonne to EUR320.25/tonne.

Yet again fresh news was relatively hard to find. The USDA reported late last night that the US 2014 corn and soybean harvests weren't as advanced as many had expected at 31% and 53% done respectively. The forecast for the week ahead is conducive to some decent progress being made between now and next Monday's report however. There's already talk of some US farmers considering leaving their corn in the field over winter, given current low prices.

UK farmers have been a bit more active in selling wheat following the recent rally from 4 year lows. "If you want wheat, you can get it," one trader told me today. The question is "who wants it?"

The sharp rebound in wheat production this year means that the UK is presented with a bit of a dilemma. Domestic demand is only so so at the moment, certainly from the feed manufacturer's perspective. Lower milk and beef prices and an assortment of cheap alternatives have seen to that. There's also an abundance of on farm fodder stocks for later in the winter.

"There’s only so much that can be absorbed by domestic demand, and a strong export programme for wheat and barley will be needed to avoid a large carryover into 2015/16," say the HGCA.

Make that a very large carryover, as of the anticipated 3.3 MMT surplus left over for export or to be carried into next season, only 142 TMT had actually been shipped abroad by the end of August (the most recent figures available).

Whilst an increase in demand from the bioethanol sector is widely anticipated in 2014/15 (up 7% according to Defra), that's only part of the story. "When it comes to bioethanol gross margins, there’s another side of the coin that needs to be considered. Ethanol prices have also been in decline as global demand has been unable to keep up with supply," the HGCA note.

Demand, or the lack of it, for the DDGS produced by these plants is also another factor to consider. This is also an industry that's been habitually plagued by operational disruptions in its relatively short history, so continuing to run at anything like "full steam ahead" for the entire season might also prove to be a challenge.

In other news, the Ukraine Ministry reported that the corn harvest there was 60% done on 2.8 million hectares, producing a crop of 14.77 MMT to date. Yields are averaging 5.28 MT/ha, if they continue to do so then they'll end up with a crop of 24.6 MMT, which would be 20% down on last year's record 30.9 MMT (using the USDA's estimate for production in 2013).

The Ukrainian Agrarian Confederation estimated corn production there at 27 MMT today.

Ukraine has also harvested 9.16 MMT of sunflower off 94% of the planned area, along with 3.19 MMT of soybeans, off 87% of the expected area.

Winter grain plantings are nearing completion in Ukraine at 92% done on 6.9 million hectares. Wheat accounts for the vast majority of that at 96% done on 5.9 million ha, with barley adding a further 779k ha (73% of plan).

APK Inform lowered their estimate for this year's Russian corn crop by 5.6% to 11.7 MMT, although that's still just about a record crop, as it's slightly ahead of last year's production of 11.6 MMT.

The Russian Ministry said that this year's corn harvest was now almost 73% done, producing a crop of 8.8 MMT so far. Yields are averaging 4.56 MT/ha so far versus 5.29 MT/ha a year ago. That suggests a final bunker weight crop of a little over 12 MMT this year.

Ag Canada estimated Canada’s 2014 wheat crop at 27.49 MMT versus previous estimate of 27.71 MMT, a drop of more than a third on last year's bin buster.

21-10-2014 08:49 AM | EU Reports
20/10/14 -- EU grains ended the day lower, pressured by falling US futures levels in expectation that good progress has been made over the weekend with the US corn and soybean harvest. The weather forecast for the week ahead is also friendly.

A firmer sterling had London wheat under a bit of extra pressure. Across the Channel, Nov 14 didn't fare as badly as the more further forward Paris wheat contracts did. That might mean a few people are getting squeezed out by the increased, and unexpected, margin call requirements announced on Friday.

The day ended with Nov 14 London wheat down GBP0.95/tonne to GBP115.55/tonne, Nov 14 Paris wheat closed EUR0.25/tonne lower at EUR159.75/tonne, Nov 14 Paris corn was down EUR1.50/tonne to EUR141.00/tonne, whilst Nov 14 Paris rapeseed was EUR4.25/tonne easier at EUR317.75/tonne.

Fresh news to start the week was fairly scant, whilst the trade is expecting good harvest progress to have been made in the US over the weekend we won't have the USDA's actual take on things until tonight.

The Russian and Ukraine 2014 harvests, and winter plantings for 2015, aren't just winding down - they're entering the final furlong. The recent benign weather conditions are seen changing in the week ahead. "Some morning frost will be observed in the Moscow region tomorrow and should gradually reach Southern Russia and the Ukraine at the end of the week," said Agritel. "Under these conditions, the (winter) crops will have only limited time to profit from the humidity of the last weeks," they added.

Exports from the region remain strong. APK Inform reported that Ukraine seaports exported 689 TMT of grains in the past week, slightly more than the 684.4 TMT shipped out the week previously

Wheat accounted for 344.5 TMT of that total, with barley 132.1 TMT and corn 212.4 TMT. It is interesting to note that whilst the overall volume exported was little changed, corn had a much larger slice of the cake last week compared to the week prior. In percentage terms, wheat exports were 50% of the net volume shipped last week, down from 77% the previous week. Barley's share held steady at 19%, but corn accounted for 31% of last week's exports versus only 4% the week previously.

That would appear to indicate, as expected, that Ukraine's grain exports will soon start to major on newly harvested corn.

APK Inform also said that domestic consumption of grain in Ukraine will fall this season, leaving potentially more available for export. Wheat consumption will fall 2.7% to 12.9 MMT (compared to the official forecast of production this year at 24.55 MMT), barley consumption will increase 4% to 5.6 MMT and corn usage will drop 9% to 9.6 MMT, they estimated.

The reason for the decline in domestic wheat usage is the reduced quality of this year's crop leading to a decrease in flour production. UkrAgroConsult said last week that only 58% of this year's Ukraine wheat crop is up to milling standard versus 75% a year ago.

With the Ukraine Ministry steadfastly predicting a record grain crop for the second year in a row this year, all this potentially points to an increase in exports of feed wheat and corn for the Black Sea nation in 2014/15. They say that they are already in negotiation with Europe for a second round of duty-free export quotas to the EU for both grains, which they hope will begin Nov 1.

Russia meanwhile continue to major on wheat exports. Their Ag Ministry say that they exported 1.77 MMT of grains in the first half of the month, including 1.28 MMT of wheat (72% of the total), 314 TMT of barley and 158 TMT of corn. That takes the cumulative 2014/15 total to Oct 15 to 13.3 MMT, a 33% increase on a year ago. That consists of 11.13 MMT of wheat (over 83% of the total), 1.61 MMT of barley and 468 TMT of corn.

Rosstat said that Russian wheat stocks as at Oct 1 were up 30.8%, with barley inventories rising 52.2% and those for corn 210% higher.

On the international tender front, Jordan are said to be in for 100 TMT each of optional origin wheat and barley for Apr-May shipment.

In rapeseed news, Oil World were said to have pegged this year's EU-28 crop at a record 23.98 MMT, a 12.5% increase on last year. Top producer here is Germany, who's crop is up 8.5% at 6.27 MMT, followed by France with 5.51 MMT (up 26%), Poland with 3.1 MMT (up 15%) and the UK in fourth at 2.41 MMT (up 13%).

18-10-2014 10:09 AM | EU Reports
17/10/14 -- EU grains finished narrowly mixed on the day, but mostly higher for the week.

At the finish Nov 14 London wheat was down GBP0.55/tonne to GBP116.45/tonne, Nov 14 Paris wheat ended EUR0.50/tonne firmer at EUR160.00/tonne, Nov 14 Paris corn fell EUR0.50/tonne to EUR142.50/tonne, whilst Nov 14 Paris rapeseed was EUR0.75/tonne lower at EUR322.00/tonne.

For the week that puts front month London wheat up GBP3.70/tonne, with Paris wheat up EUR1.25/tonne, corn up EUR1.75/tonne and rapeseed EUR2.00/tonne weaker.

There was a general dearth of fresh news. There is however some evidence that fresh spec money is coming back into the grains sector, wooed away from falling global equities. Whether this is the beginning of a long-term trend it's too early to say.

The FTSE 100 hit a 15 month low yesterday, and had fallen 8.6% in the past month in lunchtime trade. The S&P 500 is down 7.4% and the Dow Jones Industrial Average 6.7% lower compared to a month ago too. In the same period Chicago wheat has risen by 9.5%, and there's some debate as to whether the traditional October lows are now already in for corn and soybeans as well.

This might be tempting some fresh money back into the grains sector it is thought.

The credibility of the Paris wheat contract took another blow when in a surprise, and controversial move, LCH.Clearnet - the clearing house behind Euronext - announced today that they are to introduce an extra margin call on short positions in the Nov 14 contract.

The move looks aimed at "encouraging" shorts to close out their positions, rather than run them to the wire with the intention of delivering against them - something which to the embarrassment of the exchange they probably won't be able to do as the two sole delivery points are still not open for intake of wheat.

There's still on open interest of the equivalent of around 4.5 MMT against the Nov 14 contract, which is way beyond the capacity of these two stores anyway, even if they were currently empty!

Brussels confirmed that they'd issued 945 TMT worth of soft wheat export licences this past week, the highest weekly total of the season so far. The cumulative export licence total is now 8.4 MMT for the current marketing year. That beats the 8.0 MMT that had been granted this time a year ago, despite the fact that the EU Commission sees soft wheat exports down by almost 17% in 2014/15 versus last season's record.

Ukraine seaports shipped 3.536 MMT of grains in September, a more than 50% increase compared to the same month in 2013. The Ukraine Ministry said that the country might export a record 34.3 MMT of grains this season, up from the existing all time high 32.8 MMT shipped out in 2013/14. The new projection would include 17.9 MMT of corn, 11.7 MMT of wheat and 4.16 MMT of barley, they say.

The Russian Ministry said that their 2014 grain harvest had now reached 105.2 MMT, with around 7% of the planned area still left to cut. That total includes 60.5 MMT of wheat, 20.9 MMT of barley and 8.3 MMT of corn.

Russian winter grain planting is nearing completion at 16.1 million ha, or 97.6% of plan. Good rains are in the forecast. In Ukraine, Agritel report that heavy rain has fallen over most of the country in recent days, creating favourable conditions for winter crop development there.

FranceAgriMer said that the French corn harvest was 19% done as of Monday, up ten points from a week ago and compared to only 5% complete a year ago. The crop was rated at a high 87% good to very good, the same as a week ago, and far better than only 57% this time last year.

French winter wheat planting is 34% complete versus 23% last week and 36% a year ago. The winter barley crop for next year is 55% sown versus 43% a week ago and 62% this time last year.

17-10-2014 08:29 AM | EU Reports
16/10/14 -- EU grains closed mixed, but mostly a little easier - doing their best to resist pressure from falling outside markets.

Nov 14 London wheat finished up GBP0.25/tonne at GBP117.00/tonne, Nov 14 Paris wheat was up EUR1.50/tonne at EUR159.50/tonne, Nov 14 Paris corn was dowwas unchanged at EUR322.75/tonne.

The FTSE 100 fell hard for a second day, on concerns over a slowdown of the global economy and the impact of the ebola crisis. The leading UK index had its largest one day fall in 16 months yesterday.

NYMEX crude oil fell below $80/barrel for the fist time since June 2012, and Brent was also down heavily. NYMEX has fallen 7% so far this week, and Brent is down 8% compared to last Friday.

Defra confirmed UK wheat yields up 17% on last year at an average 8.6 MT/ha, with winter barley up 13% at 7.2 MT/ha, spring barley up 6% at 6.0 MT/ha and OSR yields 25% higher than a year ago at 3.7 MT/ha.

UK wheat plantings were up 20%, taking production to 16.6 MMT, a 39% jump versus 2013. With winter barley plantings up 38%, production is 56% higher than a year ago at 3.1 MMT. Spring barley sowings fell 28%, taking production 23% lower to 3.9 MMT. Despite an 8% decline in OSR plantings, the much better yields achieved this year see production up 17% at 2.5 MMT.

Customs data shows that the UK imported more wheat than it exported again in August, stretching that run to 27 months in a row. Imports came in at 228.7 TMT, a 17% rise versus July, with France (78 TMT), Denmark (66 TMT) and Germany (30 TMT) the leading suppliers.

The UK exported just under 130 TMT of wheat in August, with Spain the top destination taking 55.4 TMT.

It looks like Spain is stepping up its imports, after a disappointing 2014 grain crop of its own. July/Aug wheat imports were up 47% versus the first two months of the 2013/14 marketing year at 1.27 MMT. Corn imports were also up sharply, 37% higher at 740 TMT.

Spain's soft wheat crop fell 16.4% to 5.6 MMT this year, with corn production down 3.4% at 4.58 MMT.

Russia's 2014 harvest is winding down at 92.6% done, producing a grain crop of 104.4 MMT to date. That total includes 60.5 MMT of wheat, 20.9 MMT of barley and 7.7 MMT of corn.

It would seem that winter planting for the 2015 harvest is also wrapping up, at 96% done on 15.8 million hectares. That's up sharply from the only 11.4 million ha that had been planted this time a year ago. Timely rains are in the forecast to get the crop off to a good start.

Ukraine's winter wheat crop is also in for a good soaking in the coming days, that's been sown on 5.7 million ha to date, which is 93% of the anticipated 6.2 million ha. Plantings for the 2014 harvest were 6.1 million ha.

The Ukraine Stats Office said that the country had harvested 24.55 MMT of wheat and 9.3 MMT of barley this year.

16-10-2014 10:09 AM | EU Reports
15/10/14 -- EU grains ended the day mixed, but mostly a little higher, following decent gains in the US grains market last night. London wheat now stands almost 8% higher than the 4-year closing low set on the last day of September.

The day ended with Nov 14 London wheat up GBP1.80/tonne to GBP116.75/tonne, Nov 14 Paris wheat closed EUR0.50/tonne lower at EUR158.00/tonne, Nov 14 Paris corn was up EUR1.25/tonne to EUR143.25/tonne, whilst Nov 14 Paris rapeseed was EUR0.75/tonne easier at EUR322.75/tonne.

Are the lows of the season really in? Or is this little rally simply a selling opportunity? Recent history doesn't give us a lot to go on. The lows of the year in London wheat across the last five years have been set in September (2009), March (2010), December (2011), January (2012) and August (2013). Not too much of a pattern there.

The yearly highs incidentally came in January (2009), December (2010), April (2011), November (2012) and January (2013). The high of 2014 also fell within these months being equalled in both March and April (GBP170.25), unless that is you think we will zoom higher than that between now and the end of the year! I suppose you could say that there's a bit more of a trend in evidence there, but not exactly one around which you could form a trading strategy.

Meanwhile the old adage of "big crops keep getting bigger" seems to be holding true in the case of America, Europe and Russia.

Coceral yesterday estimated the EU-28 wheat and corn crops at a record 155.3 MMT and 72.79 MMT respectively. The USDA currently tell us that the US corn and soybean crops will come in at a record 367.68 MMT and 106.87 MMT respectively, and many think that both could end up even higher yet.

The Russian Grain Union today estimated the 2014 grain crop there at 106 MMT in clean weight, including 60 MMT of wheat, 20 MMT of barley and 13 MMT of corn. The corn figure would be an all time high, and the wheat figure the highest since 2009 and the barley estimate the best since 2008.

The Russian Ag Ministry say that the 2014 harvest there is now 92.4% complete at 104.1 MMT in bunker weight. That includes 60.4 MMT of wheat (off 92.9% of the planned area), 20.8 MMT of barley (96.7%) and 7.6 MMT of corn (62.3%). They also say that winter planting for the 2015 harvest has raced to 93.9% complete on 15.5 million hectares versus only 10.7 million ha this time a year ago.

Ukraine winter grain planting is also well advanced their Ag Ministry told us earlier in the week.

Significantly, Agritel report that Ukraine and central/southern areas of Russia are in for their best rain event of the autumn in the coming days, which should provide a massive boost to germination and crop development ahead of the winter.

Rusagrotrans raised their forecast for Russia's October grain exports from 3 MMT to 3.3-3.4 MMT, which would be a record volume for the month. Russia also set record monthly export volumes in both August (an all time high for any month in fact) and September. They said that Russia's deep water ports exported 1.58 MMT of grains in Oct 1-13, almost matching the 1.69 MMT shipped out in the first 13 days of September.

The Ukraine government said that they are in negotiations with Europe to obtain further preferential duty free grain export quotas in addition to the existing ones (which have already been filled in the case of wheat and corn) that expire on Oct 31. They were previously issued with a quota to export 950 TMT of wheat and 800 TMT of corn duty free to Europe, and are hoping to strike a deal beginning Nov 1, which isn't really what you want to hear if you're an EU grower.

16-10-2014 08:59 AM | EU Reports
15/10/14 -- EU grains ended the day mixed, but mostly a little higher, following decent gains in the US grains market last night. London wheat now stands almost 8% higher than the 4-year closing low set on the last day of September.

The day ended with Nov 14 London wheat up GBP1.05/tonne to GBP116.005/tonne, Nov 14 Paris wheat closed EUR0.50/tonne lower at EUR158.00/tonne, Nov 14 Paris corn was up EUR1.25/tonne to EUR143.25/tonne, whilst Nov 14 Paris rapeseed was EUR0.75/tonne easier at EUR322.75/tonne.

Are the lows of the season really in? Or is this little rally simply a selling opportunity? Recent history doesn't give us a lot to go on. The lows of the year in London wheat across the last five years have been set in September (2009), March (2010), December (2011), January (2012) and August (2013). Not too much of a pattern there.

The yearly highs incidentally came in January (2009), December (2010), April (2011), November (2012) and January (2013). The high of 2014 also fell within these months being equalled in both March and April (GBP170.25), unless that is you think we will zoom higher than that between now and the end of the year! I suppose you could say that there's a bit more of a trend in evidence there, but not exactly one around which you could form a trading strategy.

Meanwhile the old adage of "big crops keep getting bigger" seems to be holding true in the case of America, Europe and Russia.

Coceral yesterday estimated the EU-28 wheat and corn crops at a record 155.3 MMT and 72.79 MMT respectively. The USDA currently tell us that the US corn and soybean crops will come in at a record 367.68 MMT and 106.87 MMT respectively, and many think that both could end up even higher yet.

The Russian Grain Union today estimated the 2014 grain crop there at 106 MMT in clean weight, including 60 MMT of wheat, 20 MMT of barley and 13 MMT of corn. The corn figure would be an all time high, and the wheat figure the highest since 2009 and the barley estimate the best since 2008.

The Russian Ag Ministry say that the 2014 harvest there is now 92.4% complete at 104.1 MMT in bunker weight. That includes 60.4 MMT of wheat (off 92.9% of the planned area), 20.8 MMT of barley (96.7%) and 7.6 MMT of corn (62.3%). They also say that winter planting for the 2015 harvest has raced to 93.9% complete on 15.5 million hectares versus only 10.7 million ha this time a year ago.

Ukraine winter grain planting is also well advanced their Ag Ministry told us earlier in the week.

Significantly, Agritel report that Ukraine and central/southern areas of Russia are in for their best rain event of the autumn in the coming days, which should provide a massive boost to germination and crop development ahead of the winter.

Rusagrotrans raised their forecast for Russia's October grain exports from 3 MMT to 3.3-3.4 MMT, which would be a record volume for the month. Russia also set record monthly export volumes in both August (an all time high for any month in fact) and September. They said that Russia's deep water ports exported 1.58 MMT of grains in Oct 1-13, almost matching the 1.69 MMT shipped out in the first 13 days of September.

The Ukraine government said that they are in negotiations with Europe to obtain further preferential duty free grain export quotas in addition to the existing ones (which have already been filled in the case of wheat and corn) that expire on Oct 31. They were previously issued with a quota to export 950 TMT of wheat and 800 TMT of corn duty free to Europe, and are hoping to strike a deal beginning Nov 1, which isn't really what you want to hear if you're an EU grower.

15-10-2014 08:29 AM | EU Reports
14/10/14 -- EU grains traded higher, with sterling weakness particularly supporting London wheat.

At the end of the day Nov 14 London wheat was up GBP2.30/tonne to GBP114.95/tonne, Nov 14 Paris wheat ended EUR1.00/tonne firmer at EUR158.50/tonne, Nov 14 Paris corn also rose EUR1.00/tonne to EUR142.00/tonne, whilst Nov 14 Paris rapeseed was EUR1.25/tonne higher at EUR323.50/tonne.

UK inflation dropped to 1.2% in September, down from 1.5% in August and below the 1.4% that the market was expecting. That keeps a lid on the inclination for the BOE to raise interest rates, putting the pound under pressure.

The trade is starting to develop a "the lows are in" vibe, even if of course nobody knows if that is really the case.

The "big crops keep getting bigger" theory continues with some however. Coearal raised their forecast for the EU-28 all wheat crop to 155.3 MMT versus the 144.64 MMT produced last year, a 7.4% increase and more than the 153.98 MMT predicted by the USDA last week.

They also put the EU-28 corn crop at 72.79 MMT, up from the 64.6 MMT predicted in June and 15.3% more than a year ago. EU-28 OSR output was pegged at 23.8 MMT, a 15.5% rise on last year. Both those estimates would be all time highs.

Out of interest, Coceral put the UK wheat crop this year at 16.42 MMT, up 38% on a year ago. They have the UK barley crop down 3% at 6.85 MMT and our OSR production at 2.42 MMT, a 13% rise versus 2013.

Elsewhere they see the French wheat crop rising from 36.87 MMT in 2013 to 37.6 MMT and the German crop up from 24.87 MMT to 27.87 MMT.

The Czech Stats Office estimated the 2014 grain crop there at 7.95 MMT, up 17% from a year ago. Wheat production was forecast at 5.4 MMT, a 15% rise compared to 2013.

The HGCA said that UK wheat opening stocks for 2014/15 were "historically high" at almost 2 MMT. That was despite last year's poor production, due to high imports.

They peg the 2014/15 wheat exportable surplus at 3.344 MMT, a more than 3.5 times rise on a year ago. Where that will go up is anybody's guess, at the moment a large proportion of it looks like getting carried into next season already.

France said that they had exported only 1.8 MMT of wheat to non-EU destinations in Q1 of 2014/15, a 25% decline on a year ago. FranceAgriMer have them down to export 8.0 MMT in 2104/15, which puts them behind hitting that target - and that aim is already a 35% fall compared to last season.

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