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30 July 2016 | Online since 2003
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1 May 2014 09:54:02|

Declining US winter crop conditions and delays for corn


EU grains closed mixed, but mostly a little lower on the day. Once again fresh news was relatively thin on the ground. Declining US winter wheat crop conditions and early planting delays for corn and soybeans support the market for the time being, as too does the ongoing Ukraine crisis.
Spring grain plantings are going well in Europe and the FSU though, and winter crop conditions are mostly very good. Winter crops in these regions are 2-4 weeks ahead of normal development, which potentially bodes well for an early harvest and decent yields.
May 14 London ended GBP0.55/tonne lower at GBP168.45/tonne, and new crop Nov 14 fell GBP0.10/tonne to GBP15.05/tonne. May 14 Paris wheat closed EUR0.50/tonne higher at EUR215.25/tonne, Jun 14 Paris corn fell EUR0.50/tonne to EUR184.50tonne and technical May 14 Paris rapeseed expired EUR5.50/tonne firmrer at EUR416.00/tonne. Other rapeseed months were around EUR2.50/tonne lower, new crop Aug 14 will be the new front month tomorrow.
The German Stats Office said that the country had exported 10.4 MMT of grains in the Jul/Feb period, a rise of 18% on twelve months previously. That includes 6.5 MMT of wheat (up from 4.8 MMT a year previously), and 1.7 MMT of barley (versus 1.2 MMT in 2012/13). They'd also imported 6.5 MMT of grains, including 2.7 MMT of wheat (versus 2.5 MMT in 2012/13) and 1.9 MMT of corn, the latter being a 27% increase on the same period twelve months previously.
What is particularly striking about these numbers is that total grain exports to fellow EU destinations actually fell 17% to 4.8 MMT, whist shipments to non-EU homes were up 87% to 5.6 MMT. A lot of the reason behind the latter will be due to the relaxation of EU sanctions against Iran, prompting them to stock up on wheat, much of it German origin, in recent months.
Russia said that farmers there had planted 6.8 million hectares of spring grains, a 21% advance on this time last year. Spring wheat plantings account for 720,500 ha, which is 5.5% of plan, up almost 400,000 ha on a year ago. Spring barley has been planted on 3.6 million ha, which is 41% of plan, and versus 2.9 million ha this time last year. Corn has been sown on 1.2 million ha (46% of plan), which is almost 250,000 ha more than this time in 2013.
In Belarus early spring grain planting, including corn, is already over, at more than 1 million ha.
In Ukraine, spring plantings are also ahead of last year, despite the political turmoil. "Recent rain in central and western regions helped the over-wintered crops and newly planted spring crops and they are looking very good at the moment. Crops further east are starting to show signs of stress from a lack of water however," said Ukraine agronomist Mike Lee.
"The season is about twenty days earlier than last year which will have the effect of increasing the yield potential for all crops assuming the season ahead is conducive to growing. However any yield potential will be restricted by a lack of finance, inflation, exchange rate fluctuations and general uncertainty which will discourage a high level of investment in to this year’s crop, particularly fertiliser," he noted.
"Gas prices going up (Russia supplies Ukraine with gas) will make grain drying expensive so I anticipate a drop in maize planting to be replaced with sunflower or even fallow. We are about half way through sunflower planting and about a third of the maize crop is now in the ground," he added.
Rabobank said that whilst Chicago wheat might average around $7/bushel in Q2 of 2014, prices will fall to around $5.60/bushel in Q4. That's almost 25% lower than where the Dec 14 future currently trades. A corresponding 25% drop in the price of Jan 15 London wheat, which will be the front month at the end of the year, would knock almost GBP40/tonne off where prices currently reside!

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