27 January 2015 | Online since 2003



London and Paris wheat 'struggling to keep their heads above water'


EU grains closed mixed, with both London and Paris wheat struggling to keep their heads above water. Support at GBP120/tonne and EUR170/tonne only just held. Nerves over Russia/Ukraine have eased a little, although the Ukraine PM said that 15% of the crops in the troubled Donetsk and Luhansk regions could be lost due to the ongoing conflict in the area.

The pound took a bit of a hit after it was revealed that UK inflation fell to 1.6% in July, down from 1.9% in June. That seemingly puts the Bank of England under little pressure to raise interest rates just yet. That may have helped buoy London wheat a little today.

The day ended with Nov 14 London wheat down GBP0.20/tonne at GBP121.10/tonne, Nov 14 Paris wheat was up EUR0.75/tonne at EUR172.50/tonne, Nov 14 Paris corn was up EUR0.75/tonne at EUR153.75/tonne and Nov 14 Paris rapeseed fell EUR2.00/tonne to EUR319.50/tonne.

London wheat in particular is still swimming against a potential tidal wave of new crop feed wheat coming its way in 2014/15.

As already discussed on here, Strategie Grains' latest estimates indicate that there will be around 20 MMT more feed wheat in Europe this year than there was last season.

Today, a Ukraine analyst with Agrotrade estimated that as much as 70% of their wheat crop might also be confined to the feed bin this year.

Persistent rain in the run-up to harvest-time, the same plight suffered by the French wheat crop, is the reason they gave. That compares with a Ag Ministry forecast of "only" 40% of this season's crop being feed grade versus 25% a year ago.

If the higher Agrotrade estimate is correct then Ukraine will have around 15.4 MMT of feed wheat on it's hands this year, up almost threefold from 5.6 MMT a year ago.

This isn't good news for feed wheat prices, not with a large (and near record) EU-28 corn crop also on the way. Ukraine too are expecting to harvest a corn crop that will only be beaten in size by last year's bumper production. If EU producers can afford (and have the room) to store their 2014 corn crop that's a luxury that will not be available to many of the producers in Ukraine. Their crop will most likely simply flood onto the market as soon as it's harvested.

EU growers don't much care for current wheat, barley or rapeseed prices - let alone those for new crop corn - but it's perhaps unlikely that many here will be able to simply store their entire inventory for both financial reasons as well as those regarding physical space. Storage also costs money too of course.

So here we are, caught between a rock and a hard place, with cash prices at, or very close to, 4-year lows on all four of those commodities.

The French wheat harvest should be just about over by now, so a more accurate assessment of the final quality there shouldn't be too far away. "Highly variable" is probably the best way to describe their crop this year.

Meanwhile the German wheat harvest is said to be around 75% complete. What's been cut so far is said to be "fairly decent" according to a report on Reuters today. It's the final 25% that is now causing concern, it too has been dogged by late season rains. Hagbergs so far are said to be "OK" and protein levels are maybe down half a percentage point on the recent average.

The German farmers' association DBV raised their forecast for the 2014 grain crop there to 50 MMT versus 47.7 MMT a year ago. That includes 26.2 MMT of wheat versus a previous forecast of 25 MMT and up 6.5% compared to 24.6 MMT a year ago. Rain it seems does indeed make grain. It's quality, not quantity, that the market is worried about.

Paris wheat for Nov 14 currently trades at the equivalent of around a EUR21.50/tonne premium to London wheat, up from EUR16/tonne a month ago. We could see that gap widen further yet.

Download



Comments


No comments posted yet. Be the first to post a comment

To post comment without approval login or register

Display name

Please enter your name

Email (optional)
Comment

Please enter your comment

Post Comment

Your comment submitted successfully.Please wait for admin approval.

Some error on your process.Please try one more time.



Jobs


21 January 2015
Accounts Senior - Agriculture & Property (ACA / ACCA)
Accounts Senior - Agriculture & Property (ACA / ACCA). Accounts Senior, Agriculture & Property, ACA, ACCA, Accountant...

7 January 2015
All Rounder x 3 Vacancies Available
Our portfolio of products include well known brands such as Dairy Crest milk, Walls Ice Cream, Nestle Ice Cream, Irn-Bru, Tiz...

13 January 2015
Full Time Poultry Workers - Staunton on Wye
General farm duties ie ground maintainence including use of equipment. This position is on our Staunton on Wye farm. >...

12 January 2015
Service Delivery Manager - Ops Manager
Managing our server farm and the 24/7 operation team. My client is an expanding start-up who is a market leader in their indu...

23 January 2015
Head of Agriculture
Head of Agriculture. Agriculture Lawyers with a network of contacts are also encouraged to apply for this role....




Top stories you may have missed
12 November 2014 | Arable
GM crops 'good for farmers and the envir...

GM crops 'good for farmers and the envir...

GM crops are good for the economy and can reduce the amount of pesticides u...


6 November 2014 | Cattle
Smaller European markets drive beef expo...

Smaller European markets drive beef expo...

Demand from smaller European markets has helped drive strong growth for UK ...


6 November 2014 | Agri Safety
Lack of engineers a 'ticking time bomb' ...

Lack of engineers a 'ticking time bomb' ...

A lack of engineers, not enough people promoting the land-based industries ...


4 November 2014 | Bees and Beekeeping
Bee action plan due: Last chance for bee...

Bee action plan due: Last chance for bee...

Environment Secretary Elizabeth Truss is launching the National Pollinator ...


4 November 2014 | Arable
Experts welcome financial boost for youn...

Experts welcome financial boost for youn...

Agricultural specialists have welcomed a potential financial boost for youn...


3 November 2014 | News
Supermarket competition on prices 'risks...

Supermarket competition on prices 'risks...

As retailers continue to participate in a highly competitive race to the bo...


31 October 2014 | Arable
New Defra farm figures 'underline volati...

New Defra farm figures 'underline volati...

New farm business income data from Defra, which focus on income from March ...


30 October 2014 | Agri Safety
Agriculture remains one of UK's most dan...

Agriculture remains one of UK's most dan...

Agriculture has remained one of the industries in which workers are most li...


29 October 2014 | Finance
UK farmland prices see 'substantial grow...

UK farmland prices see 'substantial grow...

Prime arable land in the UK has seen a substantial year-on-year growth in p...


27 October 2014 | Arable
Satellites to help farmers pinpoint dise...

Satellites to help farmers pinpoint dise...

A new mobile app for farmers able to pinpoint and identify disease, pests a...