31/05/12 -- EU grains finished mixed with Jul 12 London
wheat down GBP1.50/tonne to GBP171.60/tonne, and with new crop Nov 12 unchanged
at GBP155.15/tone. Nov 12 Paris wheat was up EUR0.75/tonne to EUR211.50/tonne.
For the month of May that places Jul 12 London wheat
GBP6.40/tonne lower and Nov 12 down a much more modest GBP0.85/tonne. Nov Paris
wheat is EUR7.75/tonne higher on the month, much of that due to acute euro weakness.
As the 2011/12 marketing year draws to a close Brussels
granted 178 TMT of soft wheat export licences this week, bringing this season's
campaign total to a fairly poor 12.0 MMT, 32% down on the 17.7 MMT exported
at the same point last season with just four weeks left to go.
So, despite the euro falling to a near two year low against
the US dollar, EU wheat isn't exactly flying off the shelves.
EU 2012/13 production prospects have improved considerably
in the past couple of months, although eastern Germany, Poland, Slovakia and
the Czech Republic could do with some of the recent rainfall that western Europe
has been enjoying recently.
Ukraine has also benefited from recent rainfall, with
the Ag Ministry there today saying that they could have a grain harvest as high
as 50 MMT this year - their third-largest harvest in the past 20 years.
Record corn production could be on the cards once again,
with a crop of 26-27 MMT possible. Despite a slump in wheat prospects to 12.0-12.5
MMT this year from 22.3 MMT in 2011, large carryover stocks mean that they could
still export a record volume of grain in the 2012/13 season, including 14-15
MMT of corn, 5 MMT of wheat and 2.5-3.0 MMT of barley.
Export duties imposed in the first four months of the
2011/12 season mean that Ukraine's carryover grain stocks into the new season
will be 11-12 MMT, far higher than the normal 3-5 MMT of ending inventories,
the Ministry estimate.
Russia's production prospects have also improved with
"drought-breaking" rains arriving for many areas of European Russia,
according to Martell Crop Projections.
30/05/12 -- EU grains finished mostly lower with Jul
12 London wheat down GBP0.90/tonne to GBP173.10/tonne, and new crop Nov 12 falling
GBP0.60/tonne to close at GBP155.15/tonne. Aug 12 Paris wheat was down EUR4.75/tonne
to EUR2108.00/tonne, whilst Nov 12 was EUR0.75/tonne lower at EUR210.75/tonne.
Outside markets were very soft, contributing to today's
weakness, with crude oil around USD3.00/barrel lower at the close of play in
Europe, meaning that Brent has lost around 13% so far this month and NYMEX even
more - in the region of 17% easier.
The Spanish stock market fell to its lowest levels in
9 years and borrowing costs there rose to around 6.5% on heightened banking
In a move akin to a vote of confidence from the board
of directors for a Premiership football manager the Spanish PM insisted that
they will definitely not need a Troika bailout - where have we heard that one
Ireland, Greece, Portugal...
The euro slumped to its worst against the US dollar since July 2010.
Asian millers say that they will switch from wheat to
corn for animal feed for the first time in over a year. South Korea bought 346
TMT of corn today and Japan has bought 500 TMT of South American origin corn
Rain in Ukraine has improved crop prospects there, whilst
things are even looking up in Russia. The president of the Grain Union there
said today that this year's wheat harvest will be roughly equal to last year
at 56 MMT, despite drought pessimism. Wheat exports in 2012/12 meanwhile will
reach 22-23 MMT, he said - well above the 18 MMT currently projected by the
Rains and cooler temperatures are in the forecast for
the US Midwest today through to Friday. The USDA last night reported spring
wheat crop conditions jumping five percentage points to 79% good/excellent.
After 6-10 days of warm and sunny weather, things are
forecast to turn cooler and wetter across much of the UK by the second half
of the long holiday weekend at the latest. Crops here are will appreciate that
and are looking excellent.
29/05/12 -- EU grains finished generally lower with Jul
12 London wheat ending down GBP3.00/tonne to GBP174.00/tonne, and new crop Nov
12 falling GBP3.25/tonne to close at GBP155.75/tonne. Aug 12 Paris wheat was
unchanged for the seventh straight session at EUR212.75/tonne, whilst Nov 12
was EUR4.50/tonne lower at EUR211.50/tonne.
Wheat was modestly lower for most of the morning, but
those losses picked up later in the afternoon when Chicago opened and wheat
there came under instant pressure.
The winter wheat harvest in Kansas is now well underway,
and early indications are that yields are generally better than expected/recently
Rain relief has arrived for Ukraine, with generally good
coverage across parched areas to the south and east. The Ministry there now
say that their grain harvest could now amount to 47.2 MMT, possibly as high
as 48 MMT, given the recent improvement in the weather.
Their 2012/13 grain exports are estimated at 22.5 MMT,
a large proportion of which is expected to be corn. Indeed they may well become
the world's second largest corn exporter after the US in the season ahead.
Russia's spring grain plantings are now estimated at
90% complete. Some sporadic rain has fallen in southern districts, but more
would be helpful.
The EU Commission's crop-monitoring unit, MARS, tweaked
their 2012 EU grain production estimates today, pegging the EU-27 wheat yield
at 5.34 MT/ha, marginally down on last year although 0.7% above the five year
average. UK yields were estimated at 8.18 MT/ha, 5.6% up on last year.
EU-27 barley yields are seen at 4.43MT/ha, 2.8% up on
last year, with yields here in the UK rising 1.7% to 5.6 MT/ha. EU-27 rapeseed
yields are seen rising slightly to 2.87 MT/ha, although the UK will suffer a
drop of 14.5% from last year's record to 3.34 MT/ha, they add.
The EU Commission estimate all wheat production in the
bloc at 134.6 MMT, 2 MMT down on last year but 2.6 MMT above the USDA's recent
forecast. EU-27 rapeseed output will only be marginally down from 19.3 MMT to
19.2 MMT, they estimate. That is also well above other analysts estimates in
the 17.5-18.0 MMT area.
This year's barley crop will total 55.4 MMT, 1.8 MMT
above the USDA's May estimate and a 3.9 MMT increase on last year, they add.
28/05/12 -- EU grains finished mixed but mostly a little
lower on the day with Jul 12 London wheat up GBP2.00/tonne to GBP177.00/tonne,
and with new crop Nov 12 down GBP0.50/tonne to GBP159.00/tone. Nov 12 Paris
wheat was down EUR0.50/tonne to EUR216.00/tonne.
It was a very quiet day with the US and much of the continent
closed for our traditional public holiday which has been delayed to coincide
with the Queen's Jubilee celebrations next week.
Mixed reports continue to come out of Russia and Ukraine.
The Ukraine national weather centre say that the winter grain harvest there
will be 43% down on last year at 14.5 MMT, with winter wheat yields likely to
average 2.6 MT/ha - that's a near 22% decline on last season, although marginally
better than the 2.45 MT/ha that the USDA predict.
The Ukraine Ag Ministry meanwhile say that crop conditions
have improved on the back of recent rains and they now rate 71.5% of the winter
wheat crop as good/satisfactory.
Russia appears to have had scattered, buy heavy in some
places, rains in recent days.
In Kazakhstan meanwhile spring grain planting is more
than three quarters complete.
Crops in the UK, France and western Germany will be benefiting
from the recent warmth after a good soaking in April and early May, although
the eastern half of Germany and Poland are said to be too dry.
25/05/12 -- EU grains finished mostly higher with Jul
12 London wheat up GBP1.00/tonne to GBP175.00/tonne, Nov 12 London wheat was
GBP1.50/onne higher at GBP159.50/tonne. Aug 12 Paris wheat was unchanged at
EUR212.75/tonne, whilst Nov 12 was up EUR3.75/tonne to EUR216.50/tonne.
For Nov 12 Paris wheat this was the highest close on
the weekly chart in almost 12 months.
On the week as a whole Nov 12 London wheat gained GBP1.50/tonne
and Nov 12 Paris wheat EUR1.25/tonne.
Drought, particularly in Russia, Ukraine and the US is
making the headlines and supporting the market.
The Euro was back under renewed pressure after Spain's
fourth-largest bank, Bankia, asked the government there for a EUR19 billion
bailout and said that it in fact made a EUR2.98 billion loss in 2011 rather
than the EUR309 million profit it announced in February.
The weak euro should support wheat prices on the continent
where the same warm and dry weather that we are currently experiencing in the
UK is also prevailing in France and Germany. As with here, this should be largely
beneficial to crops after a cool and wet April and early May, although it may
not be too long before some are saying it's too hot and too dry here as well.
In the UK most crops are looking magnificent and appear
to be growing before your eyes now that they finally have some much-needed heat
Corn planting in France is said to be 93% complete by
FranceAgriMer, with emergence running at 76%.
Brussels only issued 84,0162 MT of soft wheat export
licences this week as the marketing year end nears - the lowest volume in 14
weeks. That brings total year to date exports to a rather disappointing 11.85
The US and much of Europe, including France and Germany,
will be closed for a public holiday on Monday.
Point of interest: A year ago today drought talk was
all the rage in the UK, France, Germany, Ukraine and Russia. The first winter
barley was cut in the Charantes area of France on 24th May 2011, with resulting
yields described at "catastrophic". Yields there finally averaged
5.7 MT/ha, around the same as here in the UK.
24/05/12 -- EU grains finished mostly higher with Jul
12 London wheat ending up GBP0.25/tonne to GBP174.00/tonne, and new crop Nov
12 up GBP1.85/tonne to close at GBP158.00/tonne. Aug 12 Paris wheat was unchanged
at EUR212.75/tonne, whilst Nov 12 was EUR0.75/tonne firmer at EUR212.75/tonne.
Reports of heavy overnight rain in southern and eastern
Ukraine should help wheat crops there. The south of Russia is apparently seeing
more scattered showers, and although crop production estimates here are being
trimmed most local analysts agree that this is not a repeat of 2010 - at least
The Russian Grain Union says that the 2012/13 grain harvest
will “at least" match last year’s 94 MMT, with wheat production
at "at least" 56 MMT. SovEcon have trimmed their estimate slightly
to 87m-91 MMT from 87m-93 MMT.
The International Grains Council have cut their 2012/13
world wheat production estimate by 5 MMT from last month to 671 MMT, 3.5% down
on last year. World ending stocks are seen falling 15 MMT, or 7.3% from last
month to 191 MMT - although this is still more than three month's usage.
World corn production on the other hand is seen rising
to an all time record 913 MT, 13 MMT up on last month's estimate and 47 MMT
more than global output last year.
"Early seeding has reinforced expectations for a
huge US harvest. Assuming a significant rise in harvested area, and with yields
forecast to match the 10-year trend, US production is projected at 355 MMT,
up by 13% year-on-year," they said.
Meanwhile corn production in Ukraine this year is pegged
at around 23.0-25.5 MMT by an assortment of local groups, around half of the
country's total cereal harvest - a much larger share than we have seen from
them before and one that could propel them to be the world's second largest
exporter after the US in the coming season.
seem that wheat's misfortune is going to be corn's gain in 2012.
In other news, the UK is technically in a double dip
recession, according to the latest figures from the Office for National Statistics.
23/05/12 -- EU grains finished mostly lower on the day
with May 12 London wheat thankfully going off the board unchanged and untraded
at GBP175.75/tonne, and with new crop Nov 12 down GBP2.65/tonne higher to GBP156.15/tone.
Nov 12 Paris wheat was down EUR2.50/tonne to EUR212.00/tonne.
Outside influences weighed on the market with European
leaders meeting to discuss the Greek situation and how to stimulate growth.
NYMEX crude fell below USD90/barrel to it's lowest levels in almost seven months,
whilst the FTSE100, Dax & Cac 40 all posted declines of around 2.5% as confidence
in a credible solution to the crisis waned. The euro fell to its lowest level
against the US dollar since August 2010 today.
US wheat and soybeans also fell sharply, although corn
did a reasonable job of bucking the trend.
Rain of varying degrees of intensity and confidence are
in the forecasts for some of the driest parts of the wheat world in the week
Following last week's steep price rally for US wheat
there is talk of Asian buyers, who had been booking cheap Australian and other
origin wheat switching back into corn now that it is the cheaper grain for the
first time in some while. East Asian countries import more than 30 MMT of wheat
and 37 MMT of corn every year, around 50% of which is used for animal feed.
A report out from the HGCA today says that no significant
wheat usage is forecast for either Ensus or Vivergo this season "as one
is currently out of production and the new plant at Hull is not expected to
be online until the summer."
UK wheat closing stocks for the current 2011/12 season
are forecast to at 1.53 MMT, similar to 2010/11 whilst remaining at historically
low levels. Wheat exports are estimated at 2.45 MMT, 8% lower than 2010/11,
Domestic cereal crops out in the field are generally
looking in very good shape, far better than this time last year, auguring well
for decent yields come harvest time.
Paris Nov 12 wheat hit 11-month highs on Monday, prompting
some new crop selling amongst French farmers. Reports suggest that good volumes
of old crop wheat are coming out of the woodwork in Poland. Heavy rains there
last week have been replaced by warm temperatures and plenty of sunshine this
week - excellent growing conditions.
22/05/12 -- EU grains finished mostly lower although
technical and very thin May 12 London wheat, which expires tomorrow, closed
up GBP0.25/tonne at GBP175.75/tonne. Nov 12 London wheat fell GBP1.65/onne to
GBP158.80/tonne. Aug 12 Paris wheat was unchanged at EUR212.75/tonne, whilst
Nov 12 was down EUR2.00/tonne to EUR214.50/tonne.
It was a bit of a "turnaround Tuesday" with
Chicago grains falling quite sharply, dragging Europe lower in sympathy.
Much needed rain in eastern Ukraine and Russia may arrive
just in time to save ailing wheat crops there.
"Very dry conditions began around a month ago in
southern Russia, where 28% of the national wheat harvest is produced. The stressful
dry spring conditions developed on top of winterkill losses in Krasnodar. This
is one of the 4 key wheat growing areas in the Southern District, where no rain
has occurred for over a month. Very extreme heat made drought stress worse,
temperatures 10-20 F above normal. Maximum temperatures in the upper 80s F and
low 90s F have frequently developed, highly unusual at 45-48 N latitude,"
say Martell Crop Projections.
"The strong ridge of high pressure responsible for
weather stress is expected to move east into Kazakhstan, Siberia and Urals in
the coming days. Near normal temperatures would resume in Russia and Ukraine,
along with a chance for heavy, soaking rain. Southern Russia is expecting very
heavy rain in Krasnodar, Stavropol and Rostov - perhaps up to 2 inches.
"Yet drought and heat stress would develop in Russia's
eastern grain belt. Siberia and Urals would be subject to stressful growing
conditions, though it appears the heat would be less intense. The ridge of high
pressure would weaken somewhat. The eastern Russia grain belt is less important
to bottom line grain production, Siberia and Urals contributing just 30% to
the national grain harvest, compared with 70% from European Russia," they
Meanwhile Ukraine has received generous rainfall in scattered
showers over the past 10 days. Some areas like Kryvyi Rih, a key wheat area
in eastern Ukraine, have caught up to normal with the recent rains entirely
wiping out spring drought, they add.
21/05/12 -- EU grains finished mixed but mostly higher
with May 12 London wheat ending up GBP0.50/tonne to GBP175.50/tonne, and new
crop Nov 12 up GBP1.65/tonne to close at GBP160.45/tonne. Aug 12 Paris wheat
fell EUR0.25/tonne to EUR212.75/tonne, whilst Nov 12 was EUR1.25/tonne firmer
It was a very choppy session in which London and Paris
wheat both opened sharply higher, following the lead of wheat on the electronic
Globex market, but then quickly capitulated mid-morning before staging a fightback
in afternoon trade.
Nov 12 London wheat had a GBP4.50/tonne trading range
on the day, with Paris wheat fluctuating within an EUR8.00/tonne range.
Forecasts for perhaps as much as an inch of rain for
hot and dry southern Russia were responsible for tempering early gains, although
there is some disagreement over how much rain will be left in storms originating
in Central Europe by the time they reach Russia. Eastern Ukraine though should
at least get some benefit en-route.
Even so, Ukraine's winter wheat output is now pegged
at 10-12 MMT, around half of the 22.3 MMT they produced last year.
Russia's spring planting campaign is around two thirds
complete, whilst Ukraine's is almost done according to their respective Ag Ministry's.
The German Statistical Office say that the country's
farmers will harvest a 9.5% lower wheat area than they did a year ago, along
with 8% fewer barley acres. Winter losses mean that German spring barley plantings
are up almost 30% this year, with the spring wheat area jumping more than 180%,
although the amount of land given over to the latter is still rather insignificant.
Rabobank are forecasting Paris wheat futures to average
EUR200/tonne in Q2, EUR190/tonne in Q3 and EUR180/tonne in Q4 of 2012. Whist
those prices are higher than their previous estimates they are all well below
UK weather conditions are seen improving this week, with
temperatures of 25C on the cards by the middle of the week in many places, apart
from down the east coast. It will certainly do the crop here plenty of good
to get some sun on its back.
Similar could be said of France too, which has had its
winter moisture deficit fully restored in the past six weeks.
It's been a quiet start to the week on the Greek crisis
front, but trouble is never far away from that quarter it would seem. The pound
is off last week's 3 1/2 year highs against the single currency, but a push
back up above the 1.25 level seems likely and could come at any time.
18/05/12 -- EU grains finished higher with May 12 London
wheat ending up GBP1.00/tonne at GBP175.00/tonne, new crop Nov 12 was GBP5.00/tonne
higher to GBP158.80/tone. Nov 12 Paris wheat was up EUR8.25/tonne to EUR215.25/tonne.
On the week as a whole May 12 London wheat gained GBP2.50/tonne
whilst Nov 12 added an impressive GBP10.60/tonne to close at its highest in
more than six weeks. Nov 12 Paris wheat was EUR19.00/tonne higher on the week,
closing at it's best levels in eleven months.
The second successive sharp monthly reduction to EU-27
wheat production prospects from Strategie Grains, and talk of potentially serious
problems developing for Russian wheat unless rain arrives soon, were behind
this week's rises.
Winter kill losses in France, Germany and Poland are
said to have been heavier than realised, according to Strategie Grains. What
has survived the winter appears to be in decent shape in France at least where
FranceAgriMer now rate 67% of the wheat crop in good/excellent condition, up
from 65% a week ago.
Wheat appears to have done a exceptionally good job of
shrugging off outside market influences this week, with Brent and NYMEX crude
both slumping to their lowest levels of the year so far on the back of the ongoing
European debt crisis.
Euro weakness is seen remaining, which should at least
help to support Paris wheat. Soft wheat exports out of Rouen more than doubled
to 123,400 MT this week, helped by shipments of more that 75,000 MT to Algeria.
Chicago wheat gained more than a dollar a bushel, around
17%, this week - way outperforming corn and soybeans. Dryness concerns also
exist here, particularly in the top producing state of Kansas where the USDA
cut good/excellent ratings by eight percentage points on Monday.
17/05/12 -- EU grains finished higher with May 12 London
wheat closing up GBP1.00/tonne to GBP174.00/tonne, and Nov 12 rising GBP1.80/onne
to GBP153.80/tonne. Aug 12 Paris wheat was up EUR3.75/tonne at EUR205.00/tonne
and new crop Nov 12 was also up EUR3.75/tonne to EUR1207.00/tonne.
A leaked report last night suggesting that Strategie
Grain would cut it's EU-27 soft wheat production estimate by 4.2 MMT to 122.7
MMT proved to be correct. The losses are mainly accounted for by much worse
winter kill damage in February than had earlier been anticipated, they said.
The reduction means that the French analysts have lopped
8.5 MMT off their forecasts for EU-27 soft wheat output in the last two months
alone, and this latest figure now represents an cut of 10.3 MMT on their original
assessment of thia year's potential and a 5% drop on last season's production.
Germany (down 1.6MMT), Poland (down 1.4 MMT) and France
(down 0.6 MMT) were the main countries responsible for the downgrade.
It wasn't all bullish news from them however. They cut
their 2011/12 and 2012/13 soft wheat export forecasts too, reflecting a lack
of competitiveness against other origins like the US, the Black Sea and South
America. For the 2012/13 season soft wheat export of only 11.4 MMT are amongst
the lowest in the last thirty years.
Concerns over Russian and Ukraine wheat production potential
this year are also grabbing the headlines, although analysts on the ground paint
a less disastrous picture. There's some talk also of US wheat prospects declining
due to dryness.
The Eurozone crisis still weighs on the market however,
and that is potentially what could still bring the grain market to it's knees
no matter what the fundamentals say.
Many are now talking of a Greek exit as being almost
inevitable. Greece’s benchmark ASE Stock Index fell to it's lowest level
since 1990 today. Greek nationals are reported to be syphoning off large sums
of money from their own banks to be deposited abroad. If and when they do depart
the immediate concern will be who is next, and that could mean a possible run
on Portuguese, Spanish and Italian banks too.
16/05/12 -- EU grains finished mixed but mostly higher
with May 12 London wheat ending down GBP0.50/tonne to GBP173.00/tonne, and new
crop Nov 12 up GBP2.70/tonne to close at GBP152.00/tonne. Aug 12 Paris wheat
ended EUR3.75/tonne higher at EUR201.25/tonne, whilst Nov 12 was also EUR3.75/tonne
firmer at EUR203.25/tonne.
Wheat was mixed throughout the morning, but headed higher
in afternoon trade after the Chicago market came in stronger. That push higher
was linked to reports of potential crop damage in Russia due to high temperatures
and scant rainfall.
There is some trade talk of similar problems in Ukraine,
although several commentators on the ground over there refer to crop conditions
bordering on "perfect" - at least in the west of the country.
US wheat ratings in the top producing state of Kansas
were downgraded sharply by the USDA on Monday, no doubt raising a few eyebrows
amongst the heavily short fund fraternity.
A late and unconfirmed story appearing via Twitter that
Strategie Grains will tomorrow cut it's EU-27 soft wheat production forecast
by more than 4 MMT to 122.7 MMT may have been behind the strength in new crop
They cut their soft wheat estimate last month by a chunky
4.3 MMT to 126.8 MMT citing frost and drought damage, so this potentially pegs
things well below what the market was expecting just a couple of months ago.
Iraq bought 400,000 MT of wheat of various origins, said
to be a combination of Russian, Romanian, Kazakh, Australian and US wheat in
a tender yesterday, adding support.
European debt worries appear to have been placed on the
back burner, at least for today, but don't be surprised to see them retake centre
stage at any time.
Meanwhile UK wheat exports in March slumped to a nine
month low of less than 125 TMT customs data shows, and that was with the added
bonus of a 47 TMT consignment shipped to the US. The latter is thought to have
been sold around eight months or so ago, UK wheat is currently priced out of
the export market and looks likely to remain so now until new crop comes along.
15/05/12 -- EU grains finished mostly higher with May
12 London wheat ending unchanged at GBP173.50/tonne, new crop Nov 12 was up
GBP1.60/tonne to GBP149.30/tone. Nov 12 Paris wheat was up EUR4.00/tonne to
After a couple of risk off day the market was perhaps
due some kind of correction. Greek concerns haven't gone away though, with the
pound rising to a new 3 1/2 year high of 1.2560 against the euro today. That
perhaps explains why Paris wheat posted better gains than London wheat today.
The market is thin and looking for direction, it's been
two months since London wheat has closed outside the GBP170's on a front month.
Dry and warm weather in parts of China, Russia, Ukraine
and Kazakhstan is causing some concern, although it's too early to quantify
any losses that may have occurred.
There are doubts over the health of US winter wheat too,
after the USDA last night cut their national crop ratings by 3 percentage points
in the good/excellent category to 60%. Top producing state Kansas saw the percentage
of its crop rated in the top two categories slump by eight points to 52%. Ideally
the crop there would like one more decent rain to see it through to harvest
in a couple of weeks time.
Spring wheat planting in the US is progressing at a record
pace, with 94% of the crop now in the ground.
Tunisia is forecast to have its largest grain harvest
in decades this year, according to its Agriculture Minister. Harvesting there
begins next month.
14/05/12 -- EU grains finished mostly lower, although
May 12 London wheat closed up GBP1.00/tonne to GBP173.50/tonne. Nov 12 fell
GBP0.50/onne to GBP147.70/tonne. Aug 12 Paris wheat was unchanged at EUR197.50/tonne
and new crop Nov 12 fell EUR0.75/tonne to EUR195.50/tonne.
Strategie Grains now say that 11% of German winter wheat
and 13% of winter barley were lost to winterkill, an upward revision from the
respective 6% and 9% estimated previously.
The German spring wheat, spring barley and corn planted
area estimates are all revised higher on the back of these losses.
They estimate the German soft wheat crop at just under
22 MMT compared with 22.7 MMT last year. Barley output is seen 9% higher this
year at 9.6 MMT, with corn production marginally higher at 5.3 MMT. Their wheat
estimate is 0.5 MMT below the USDA's figure released Thursday, whilst their
barley forecast is 0.5 MMT higher than the USDA.
They also say that the weather in France during April
"was again rather unusual. The volume of national rainfall was almost 165
% of the average for this month. There were rainstorms and especially heavy
rain in western France (double the seasonal average). The water balance since
the start of March is now +30% in most regions but it remains in deficit compared
to average for the period from September through May."
We maintain our estimate for total wheat area published
April 17 of 4.8 Mha (4.99 Mha in 2011/12). Projected wheat yield is revised
up at 7.13 MT/ha (7,09 MT7/ha previously and 6.81 MT/ha in 2011/12) due to the
increases in Normandy, Picardie and Nord-Pas-de-Calais. We now expect soft wheat
production at 34.22 MT (34.06 MT previously and 33.99 MT in 2011/12), they add.
11/05/12 -- EU grains finished mixed with May 12 London
wheat finishing down GBP1.25/tonne to GBP172.50/tonne, and new crop Nov 12 falling
GBP0.30/tonne to close at GBP148.20/tonne. Aug 12 Paris wheat ended EUR3.75/tonne
lower at EUR197.50/tonne, whilst Nov 12 was EUR0.75/tonne firmer at EUR196.25/tonne.
On the week as a whole May 12 London wheat gained GBP0.25/tonne
and Nov 12 lost GBP1.30/tonne to close the week at its lowest since February.
Nov Paris wheat was EUR0.50/tonne higher on the week.
EU wheat still looks expensive relative to its US counterpart.
Benchmark new crop month Jul 12 Chicago wheat closed below USD6/bushel for the
first time in the contracts life today, and trading in that began in August
EU wheat exports will slump to their lowest levels in
five years in 2012/13 the USDA said yesterday. At 14.5 MMT they will be down
12% down on this season and 37% lower than last year, they forecast.
The weak euro is helping to support Paris wheat a little,
with sterling briefly breaking through the 1.25 level for the first time since
Nov 2008 today. Even so EU exports aren't exactly flying out of the door. Brussels
issued 176 TMT of soft wheat export licences this week, bringing the marketing
year to date total to 11.65 MMT, 32% down on year ago levels.
April rains have replenished soil moisture deficits in
the UK, France and western Germany. FranceAgriMer rate 65% of the French wheat
crop in good/excellent condition. The French body also raised their estimates
for wheat and corn 2011/12 carryover yesterday due to lower exports than anticipated.
Commodities in general were under pressure today following
the announcement that America's largest bank, JPMorgan Chase, has suffered losses
of "at least" USD2 billion due to a risky hedging strategy. That may
lead to calls for tighter regulation on speculative activity in the grains market.
10/05/12 -- EU grains finished mixed but mostly lower
with May 12 London wheat ending up GBP0.25/tonne to GBP173.75/tonne, new crop
Nov 12 was down GBP0.40/tonne to GBP148.50/tone. Expiring May 12 Paris wheat
crashed EUR12.75/tonne to EUR215.75/tonne, whilst new crop Nov 12 was down EUR1.75/tonne
The last remaining old crop Paris contract staged another
dramatically thin performance, reversing all of yesterday's equally off the
wall EUR11.50/tonne gains and then some.
Today was all about the USDA who gave us their first
2012/13 world crop production estimates, along with both old crop and new crop
ending stocks projections both in the US and around the world.
Essentially the reports were bullish soybeans (and thus
rapeseed), bearish corn and somewhere in the middle for wheat.
For soybeans they cut 2011/12 US ending stocks by more
than expected to 5.7 MMT and projected 2012/13 carryout even tighter at 3.9
MMT. US ending stocks have only been lower than this four times in the last
forty years, and when the latter number is taken on a stocks to usage basis
this is the tightest availability since the mid-1960's. Meanwhile insatiable
China's 2011/12 soybean imports are seen rising 3.7 MMT to 56 MMT, and by a
further 4 MMT to 61 MMT in 2012/13.
The USDA pegged the EU-27 rapeseed crop down almost 6%
to 18 MMT this year. World and EU-27 rapeseed ending stocks are forecast at
nine year lows in 2012/13. World stocks will slump 32% to 2.86 MMT – less
than half of where they were two years ago. Europe’s stocks meanwhile
will more than halve from where they are expected to be at the end of this season
to just 675,000 MT.
They estimated that the UK will produce a marginally
lower 2.7 MMT rapeseed crop this year, with French production also seen down
a tad to 5.25 MMT. German output will recover 15% from last season's drought
damaged crop to 4.45 MMT.
The world corn numbers were undeniably bearish, with
US 2011/12 ending stocks increased to 21.6 MMT and those for 2012/13 seen more
than doubling to 47.8 MMT. US production this year was pegged at a record in
excess of 375 MMT, with world output also pegged at a record of almost 946 MMT
- well above the ICG's current estimate 900 MMT.
For wheat they gave us a world crop of 677.6 MMT, which
was very much in the ballpark of other estimates from the IGC (676 MMT) and
the FAO (675 MMT). World ending stocks are seen declining by 9 MMT to 188 MMT
in the coming season.
The EU-27 wheat crop will come in at 132 MMT this year,
they said. That's a 4% drop on last year. In amongst that there was little change
on last year for the three main protagonists, with a UK crop of 15.6 MMT, a
French crop of 36.5 MMT and a German crop of 22.5 MMT.
Separately FranceAgriMer raised their estimates for wheat
and corn 2011/12 ending stocks there due to domestic prices being too high to
meet earlier export forecasts.
09/05/12 -- EU grains finished mostly lower with May
12 London wheat closing down GBP1.00/tonne at GBP173.50/tonne, and Nov 12 falling
GBP1.05/tonne to GBP148.90/tonne. May 12 Paris wheat bucked the trend and jumped
EUR11.50/tonne to EUR228.50/tonne and new crop Nov 12 fell EUR0.75/tonne to
May 12 Paris wheat goes off the board tomorrow, and clearly
got very technical at the eleventh hour, so we shouldn't read too much into
that. Old crop milling wheat delivered Rouen is trading around EUR205-207.00/tonne
- the equivalent of around GBP165-166.00/tonne. New crop wheat to the same destination
for July delivery is around EUR197.00/tonne - or just over GBP158.00/tonne.
The pound rose to fresh 3 1/2 year highs against the
euro today as Greece is starting to look increasingly likely to baulk at any
more austerity and select the default option. Meanwhile Spain says that it is
to part nationalise it's fourth largest bank BFA-Bankia after the markets close
The repercussions over a possible Greek default are seeing
spec money exit the grains market, especially ahead of the USDA's reports tomorrow
which will include their first ever forecasts for 2012/12 crop production.
EU-27 crop conditions meanwhile have improved significantly
in the past 4-5 weeks, with abundant rainfall across the UK, France and Spain.
The western half of Germany has also received beneficial moisture, although
further east and into Poland things are looking less rosy.
In the midst of their 2012 wheat harvest India’s
food ministry report that the country’s food grain stocks as of May 1
are 71.1 MMT, more than three times the required buffer amount, with stocks
likely to rise to 80 MMT as the harvest wraps up. They have today signed a trade
agreement with Iran which will probably act as a precursor for them to export
as much as 4 MMT of wheat to the Arab nation weighed down by sanctions from
The US winter wheat harvest has already begun in periphery
southern states and will soon be underway in the nation's largest producing
state of Kansas, some 3-4 weeks earlier than normal. Bumper output is expected
with crop conditions far better than they were a year ago.
08/05/12 -- EU grains finished higher with May 12 London
wheat finishing up GBP2.50/tonne to GBP174.50/tonne, and new crop Nov 12 rising
a more modest GBP0.45/tonne to close at GBP149.95/tonne. May 12 Paris wheat
ended EUR0.25/tonne higher at EUR217.00/tonne, whilst Nov 12 was EUR3.25/tonne
firmer at EUR198.00/tonne.
There seems to be little rhyme or reason to the markets
at the moment, they are up for a day or two and then down for a day or two -
it's been more than a month since May 12 London wheat closed outside the GBP170's.
These remaining old crop months are pretty illiquid though,
new crop Nov 12 London wheat however does seem to be in a trend, and it's downwards,
having closed at GBP163.50/tonne in late March. Nov 12 Paris wheat peaked at
EUR208.25/tonne at the same time.
Fresh news is thin on the ground. Jordan bought 50,000
MT of optional origin wheat in a tender overnight. Tunisia bought 75,000 MT
of wheat from an unspecified origin.
America's harvest is growing ever closer though and all
the signs point to good, possibly even record, yields in some states. Spring
wheat is also going into the ground in a very timely manner.
Meanwhile US corn planting is at its third fastest pace
ever, maturity is massively above normal, 32% now as opposed to just 6% last
year. This means that the crop is less likely to be at the crucial pollination
stage at the height of the summer heat. It should also be less vulnerable to
an early frost too.
The USDA will report on US and world production prospects
for 2012 for the first time on Thursday. We've got used to being thrown a surprise
or two in recent reports, few would bet against them doing the same again this
07/05/12 -- EU grains finished mostly lower although
London wheat was closed for a belated May Day holiday. May 12 Paris wheat ended
down EUR3.25/tonne at EUR216.75/tonne, new crop Nov 12 was down EUR1.00/tonne
For new crop Nov 12 Paris wheat this was the lowest close
in two months as the coming season's harvest hopes rise on improving prospects
in Western Europe and the US.
Much of the SE of England, and most of France and Spain
have had between two and six times their normal rainfall totals in the past
14 days, according to Martell Crop Projections.
US production hopes have also improved significantly
since winter wheat went into dormancy, with abundant rains in recent months
boosting hopes that the top producing state of Kansas will have a record yield
Weekend election results in France and Greece knocked
the euro to its lowest levels against the pound since November 2008. New French
PM Francois Hollande is likely to less willing to climb into bed with German
Chancellor Angela Merkel than the ousted Nicolas Sarkozy.
That potentially threatens the uneasy accord that has
been struck within the fiscally mired Eurozone of late. Meanwhile Greece faces
political and financial turmoil after the pro-austerity parties took a thrashing
at the polls.
The market is already suggesting that a new coalition
Greek government is unlikely to have enough support from the pro-austerity sector
to push through the necessary spending cuts needed to qualify for the next tranche
of EU bailout funding.
With each week that passes the new 2012/13 marketing
year gets closer. The USDA will issue their first production estimates for the
coming season on Thursday this week. US analytical firm Informa Economics on
Friday forecast word corn production in 2012/13 at a record 932 MMT, which is
67 MMT (or 7.6%) up on last year. That's well above the IGC's April estimate
of 900 MMT.
04/05/12 -- EU grains finished mostly lower with May
12 London wheat closing down GBP5.00/tonne at GBP172.00/tonne, and Nov 12 falling
GBP1.85/tonne to GBP149.50/tonne. May 12 Paris market rose EUR2.50/tonne to
EUR220.00/tonne and new crop Nov 12 fell EUR3.00/tonne to EUR195.75/tonne.
May 12 London wheat was down GBP6.50/tonne on the week,
with new crop Nov 12 falling GBP6.10/tonne. Conversely May 12 Paris wheat rose
EUR6.30/tonne compared with last Friday, whilst Nov 12 fell EUR7.00/tonne.
For May 12 London wheat this was the lowest close in
more than three weeks, for new crop Nov 12 it was the lowest close since late
Paris rapeseed futures also fell hard, closing with losses
of around EUR7-10/tonne on ideas that April rains and cooler temperatures have
boosted Western Europe's chances of salvaging a decent crop this year and forecasts
for similar conditions to move into Eastern Europe this weekend.
US wheat prospects are looking good with a sharp rebound
in production in the top producing states of Kansas and Oklahoma on the cards.
Crops are well forward too, with one report coming through today of harvesting
having already started in Oklahoma 3-4 weeks ahead of schedule.
Both states are expected to have their biggest wheat
crops since 2003.
US analytical firm Informa Economics today estimated
the 2012 US winter wheat crop at 45 MMT, an increase of more than 10% on last
year. In addition they pegged spring wheat plantings at 13.5 million acres,
1.5 million above the USDA's latest estimate.
Corn plantings in the US are also seen rising this year,
to 96.1 million acres according to Informa which is 0.2 million more than the
USDA most recently said.
Outside markets were also a bearish influence, with Brent
crude falling through key support levels and US oil shedding more than 4% on
the day to trade below USD100/barrel for the first time since February. The
euro slumped to its lowest levels against the pound since June 2010 ahead of
nervousness ahead of weekend elections in France and Greece.
03/05/12 -- EU grains finished mostly lower. Technical
May 12 London wheat finished up GBP2.75/tonne at GBP177.00/tonne, making it
now a curious GBP5.50/tonne premium to July. The more liquid new crop Nov 12
fell GBP2.40/tonne to close at GBP151.35/tonne. May 12 Paris wheat ended EUR0.25/tonne
lower at EUR217.50/tonne, whilst Nov 12 was EUR3.00/tonne weaker at EUR198.75/tonne.
Frankly, London wheat is becoming more and more of a
joke, having less correlation to the physical market than ever. It remains to
be seen how much longer this charade can carry on for with a new Black Sea wheat
future set to begin trading next month.
FranceAgriMer say that the soft wheat crop there is now
rated 65% good/excellent, up two percentage points on a week following plentiful
Brussels issued 164TMT of soft wheat export licences
this week, down by more than a quarter on last week.
With only 8 weeks to go to the end of the marketing year,
EU-27 soft wheat exports are down by almost a third on year ago levels, a situation
unlikely to improve given current unadvantageous pricing structures.
The Ukraine Ag Ministry said that Ukraine exported 17.8
MMT of grains from July 1st through to May 3rd, an 80% increase on a year ago.
They also added that they will export 2.0-2.2 MMT/month in May-Jun, bringing
the entire 2011/12 marketing year exports to around 22 MMT.
Food and Agriculture Organisation say that world wheat production in the coming
season will come in at 675 MMT, 3.6% down on last year but broadly in line with
other estimates from the likes of the IGC who said 676 MMT late last month.
02/05/12 -- EU grains finished mixed with May 12 London
wheat down GBP2.25/tonne to GBP174.25/tonne and Nov 12 down GBP1.40/tonne to
GBP153.75/tonne. May 12 Paris wheat was EUR1.25/tonne higher at EUR217.75/tonne,
new crop Nov 12 was down EUR2.00/tonne to EUR201.75/tonne.
Rapeseed was showing solid gains for most of the day
amidst ideas that the EU-27 crop would struggle to be much higher than 18 MMT
this year, further supported by Chicago soybeans surging to fresh highs in afternoon
A late capitulation, as soybeans got dragged lower by
sinking corn and wheat values across the pond, however saw rapeseed futures
close well off session highs. Nov 12 Paris rapeseed closed EUR1.00/tonne higher
at EUR475.75/tonne having been as high as EUR481.00/tonne at one stage.
April's abundant rainfall means that wheat potential
in the UK, France and Germany has improved dramatically.
Things would appear to have improved significantly in
Ukraine too, where agronomist Mike Lee reports "perfect growing conditions"
and is upbeat about new crop production prospects.
In America, a Kansas crop tour found winter wheat crops
there to be in great shape with yields on day one coming in at 53.6 bushels
an acre, much better than the 40.7 bushels an acre average over the last three
years and more than 50% up on the state's poor average of just 35 bushels and
acre last year.
A Bloomberg survey pegs the final Kansas wheat yield
at 45.8 bushels an acre this year, the best since 2003.
The crop there is also said to be around four weeks ahead
of normal maturity, meaning that an early harvest is on the cards leaving less
time for Mother Nature to throw it a curveball.
The euro was under pressure again on news that Euro-zone
unemployment hit 10.9% in March - the highest since the euro was formed in 1999.
01/05/12 -- EU grains finished lower with May 12 London
wheat closing down GBP2.25/tonne at GBP176.50/tonne, and Nov 12 falling GBP0.85/tonne
to GBP155.15/tonne. The Paris market was closed for the May Day holiday.
With Paris and much of the continent, including the Black
Sea, out of action there was little going on today.
The USDA last night said that US farmers planted a quarter
of the anticipated 2012 corn acreage in just a week as of Sunday night. Planting
is already past the halfway point at 53% done versus only 27% normally. Emergence
is 15% compared to 6% normally.
There's a long way to the finishing post yet, but the
crop has clearly been given the best possible start.
In addition spring wheat plantings are more than double
their normal rate at 74% complete and emergence is 30% versus only 8% for the
five year average.
Winter wheat crop conditions improved slightly from last
week to 64% good/excellent (compared to just 34% a year ago). Maturity of the
crop is also well advanced at 54% headed compared to 24% on average.
The USDA attaché in Romania said that widespread
damage to the winter rapeseed crop there will see an increase in corn acres
this spring, a situation that is likely to be replicated in many parts of Eastern
Europe. Romania's wheat and barley output are also both seen around 10% lower
In Western Europe the drought may finally be broken but
April rains have arrived late enough to see Spain's corn plantings fall by more
than 15% this spring, according to the Ag Ministry there. Durum wheat production
in the south of the country is likely to take a significant hit, although rain
in the north over the past month should alleviate some damage to the wheat and
barley crops there.
UK and France the old adage "rain makes grain" will be tested this
year, with some crop reports already saying that there's been no crop damage
"yet". The Met Office say that the UK's April rainfall total was the
wettest on records which date back to 1910, surpassing even the previous record
of 120.3mm set in 2000.
Out of interest rain did indeed make grain in 2000 as
we ended up with our second highest wheat crop ever. The record high production
year of 2008 was also dogged by persistent rains that led to some fields not
getting harvested until October.