EU Grains Mixed, Wheat Gives Up Early Gains

01/07/15 -- EU wheat posted decent early solid gains, with the French market initially building on yesterday's highest closes on the front month in over a year, and with new crop Nov 15 London wheat hitting it's best level since January. The latter contract saw high volume trade, getting as high as GBP136.50/tonne at one stage, although an afternoon turnaround in Chicago soon had European grains following suit.

It was almost as if the market suddenly realised that yesterday's USDA report was bearish for wheat, so why did Chicago wheat end over 30 cents higher?

At the finish Jul 15 London wheat was down GBP0.95/tonne to GBP116.70/tonne, Nov 15 was EUR1.05/tonne easier at GBP130.95/tonne, Sep 15 Paris wheat fell EUR0.25/tonne to EUR201.00/tonne, Aug 15 Paris corn was up EUR3.00/tonne to EUR189.75/tonne, whilst Aug 15 Paris rapeseed rose EUR1.25/tonne to EUR398.50/tonne.

Early strength was supported by concerns that EU crop production potential is wilting in the excessive heat that's around Europe this week. FranceAgriMer on Friday cut the proportion of the French winter wheat crop rated good to very good by four percentage points, and further reductions look likely in the coming weeks too.

Although they release their weekly reports on a Friday, they are actually based on conditions as per Monday of that week, hence we won't really get to see how much damage, if any, has been done by this week's searingly hot temperatures in France until we get next week's report on Jul 10.

The mercury is forecast to hit 39C in Paris today, and to almost match that at 38C on Friday - when the night-time low is set to be a balmy 26C!

In Germany meanwhile, Berlin is forecast to bake in temperatures of 36C on Saturday, peaking at 37C on Sunday.

The country's farmers union, Deutscher Bauernverband (DBV), yesterday estimated this year's German grain crop at 47.1 MMT, an 11% reduction on a year ago. Wheat production will fall 8.3% to 25.12 MMT, corn output is seen down 7.2% to 4.77 MMT, and the German rapeseed crop will tumble 20.5% to less than 5 MMT, they estimate.

A significant decline in plantings, combined with lower yields due to the neonicotinoid ban, has particularly hit rapeseed production this year, they said.

FCStone released their latest EU-28 crop production estimates today, and they are all lower than where the USDA currently stand with the wheat crop here at 140.68 MMT versus the USDA's current 143 MMT forecast. They see corn output at 66.64 MMT (68.14 MMT from the USDA) and rapeseed production at 21.33 MMT (22.10 MMT from the USDA).

The US remains excessively wet, whilst the forecast light showers will offer only very slight relief to the dry areas of the Canadian Prairies. The CWB cut their estimate for this year's Canadian canola crop to 12.6-13.0 MMT earlier in the week, and some private analysts are now saying that even that forecast is still "way too high" and that production could be closer to 10 MMT this year!

A report on Bloomberg today said that Australia & New Zealand Banking Group were likening this year's dryness in Canada to 2002, when wheat production fell to less than 16 MMT on yields of 1.83 MT/ha. The USDA currently has Canadian wheat yields this year at 3.02 MT/ha.

The old 2014/15 marketing year is now officially dead for many, with Russia expected to have exported a record volume of grain in what is technically now last season, despite the temporary duty introduced on wheat sales.

The Russian Grain Union estimate total grain exports in 2014/15 at 31.7 MMT, and Rusagrotrans say 31.9 MMT. The previous record year was 2011/12 when 28.4 MMT was shipped out, so that figure has been comfortably beaten this time round it would seem. Wheat will have accounted for around 21-22 MMT of that total it is thought.

Old crop carryout, including stocks held in the government's intervention fund, are called at around 14.8-15.0 MMT, a sizable figure, that will doubtless mean they will be their usual aggressive selves as soon as the 2015/16 harvest gets going in earnest. That's with the caveat that the new "floating" wheat export duty, which comes in today, doesn't rise too high.

Looking ahead, the Russian Grain Union now estimate the 2015/16 grain crop at 95-98 MMT, including 54-55 MMT of wheat. Rusagrotrans go for figures of 98 MMT and 57 MMT respectively.

Exports in 2015/16 are seen at 29-31 MMT, although there's a difference of opinion on wheat exports. Rusagrotrans has these at 20-21 MMT, but the Grain Union think that they may only total 17-18 MMT, hurt by the new export tax.

Finally, still feeling hard done to? Spare a thought for growers in Ukraine, where the State Stats Service said that agricultural production costs jumped 60% in the first five months of 2015 compared with the same period a year ago.

Chicago Corn Ends Limit Up, Leading US Grains Sharply Higher

30/06/15 -- Soycomplex: Beans closed with strong gains after the USDA put Jun 1 US soybean stocks at 625 million bushels versus trade ideas of 670-680 million. "Based on the USDA demand balance sheet, 4th quarter demand should be 470 million bu which implies a 14/15 carryout of 200 million bushels or 130 million less than their June estimate of 330 million," noted Benson Quinn. Plantings this year were placed at a record high 85.14 million acres, a bit below the average trade guess of 85.332 million acres, although up versus the USDA's March figure of 84.635 million. Analysts were already pointing out prior to this that this was based on a survey done before the worst of the Midwest wetness hit, so it is widely anticipated that plantings will in fact come in lower than today's forecast. The USDA will apparently re-survey some states and update their acreage figures in their August WASDE report. "From early talk of large increase in soybean acres, today’s number along with lower carryin estimate is bullish with US 15/16 carryout now closer to 325 million than June’s USDA estimate at 475 million," said Benson Quinn. Volume today was "huge" they added, doubtless helped by fund money caught on the wrong side short-covering. Jul 15 Soybeans closed at $10.56 1/4, up 53 3/4 cents; Nov 15 Soybeans closed at $10.37 1/4, up 57 1/4 cents; Jul 15 Soybean Meal closed at $359.50, up $17.60; Jul 15 Soybean Oil closed at 33.56, up 51 points.

Corn: The corn market closed around limit up. It's been a long time since I last wrote those words. The USDA put US corn stocks and plantings lower than the trade expected, sparking some frantic short-covering. US June 1 corn stocks were pegged at 4.447 billion bushels versus an average trade guess of 4.557 billion. US corn plantings were estimated at 88.897 million acres versus the March USDA figure of 89.199 million and the average trade guess in a Bloomberg survey of 89.136 million. It is also 1.7 million lower than a year ago. The USDA put harvested acres at 81.101 million which is more than 2 million below last year. "Combine the lower stocks estimate with tighter acres and decreasing yield expectations and things begin to tighten for the 2015 crop. Undoubtedly the top has been taken off the crop with most analyst now pegging the crop towards the mid to lower 160’s per acre. Using 162.5 bushels per acre and 81.101 million acres, total production would be 13.178 bln bushels versus 13.630 bln in the June WASDE report," calculated Benson Quinn. The EU Commission estimated corn production there this year at 68.45 MMT, down 7% from a year ago. South Africa's CEC cut their estimate for this year's corn crop there to 9.755 MMT from 9.84 MMT previously. This would be the smallest crop since 2007, said Bloomberg. Jul 15 Corn closed at $4.14, up 30 3/4 cents; Dec 15 Corn closed at $4.31 1/2, up 29 1/4 cents.

Wheat: The wheat market closed with strong gains, supported by spillover from beans and corn. This was despite the USDA pegging US June 1 stocks and the 2015 US wheat acreage higher than the average trade estimates. Wheat stocks of all classes were 753 million bushels versus an average trade guess of 712 million. Plantings were pegged at 56.079 million acres compared to the average pre-report guess of 55.707 million. None of that seemed to matter on a day like today, and wheat joined the other markets and moved strongly higher for a fourth session in a row. Chicago wheat ended at it's highest close of the year on a front month basis. Stats Canada added some friendly news by cutting their forecast for Canadian all wheat plantings to 24.1 million acres, down from a previous government estimate of 24.8 million, and also below the average trade guess of 24.77 million. Rusagrotrans cut their forecast for this year's Russian grain crop to 98 MMT, down from 105.3 MMT a year ago, on dryness in some areas. The head of the Russian Grain Union said that they may drop their wheat production forecast from the current 55 MMT when they release their next estimate. Dryness and extreme heat in many parts of Europe this week might be trimming wheat production potential there. The EU Commission today cut their forecast for this year's EU wheat crop from 141.46 MMT to 139.95 MMT versus 148.76 MMT a year ago. Jul 15 CBOT Wheat closed at $6.14 3/4, up 34 1/4 cents; Jul 15 KCBT Wheat closed at $5.93 1/4, up 21 3/4 cents; Jul 15 MGEX Wheat closed at $6.22 1/4, up 18 1/4 cents.

French Grains Rise To More Than 1-Year Highs

30/06/15 -- EU grains closed mostly higher, getting support from firmer US markets following the afternoon release of the USDA's latest US acreage estimates and quarterly stocks reports, and with the Paris market again buoyed by the weak euro.

At the close, Jul 15 London wheat was down GBP0.05/tonne to GBP117.65/tonne and Nov 15 London wheat was GBP0.35/tonne higher at GBP132.00/tonne. Sep 15 Paris wheat closed up EUR2.75/tonne at EUR201.25/tonne, Aug 15 Paris corn jumped EUR8.00/tonne at EUR186.75/tonne, whilst Aug 15 Paris rapeseed was up EUR5.25/tonne to EUR397.25/tonne.

For Paris wheat, corn and rapeseed this was the highest front month close in more than a year, helped by the weak euro with the market anxious ahead of tonight's GMT 22.00 deadline for Greece to make a crucial loan repayment to the IMF.

Very warm and dry weather across much of Europe this week may be taking some of the shine off potential wheat, corn and rapeseed yields too this year, adding a bit more support to the market.

The EU Commission cut their forecast for the 2015 EU soft wheat crop from the 141.46 MMT estimated previously to 139.95 MMT, a 5.9% fall on 148.76 MMT a year ago.

They did however raise their corn production estimate a little from 68.13 MMT to 68.45 MMT, although that's still a 7% decline compared to last year.

A Bloomberg survey estimated the EU soft wheat crop a little higher, with an average trade guess of 140.6 MMT. The range of estimates was still pretty wide even at this relatively late stage in the game at 137.4 MMT to 145 MMT.

The same survey put the EU all wheat crop at 147.7 MMT, down nearly 10 MMT on a year ago for a drop of 6.3%.

The French all wheat crop was estimated at 39.2 MMT, from within a range of 37.8-40.5 MMT, and up slightly on 39.2 MMT a year ago.

The German all wheat crop was forecast at an average of 25.7 MMT, down 7.6% on a year ago. The range of guesses for that were 24.9-27.0 MMT.

The President of the Russian Grain Union said that the organisation may cut it's Russian wheat production estimate from the current 55 MMT forecast due to excessive dryness and also wetness in various parts of the country.

He also said that the official Ag Ministry's spring wheat planting estimates may be too high.

Russia's new export duty on wheat kicks in tomorrow.

The Ukraine Ag Ministry said that the 2015 early grain harvest had been completed on 188.2k ha, or around 5% of the planted area, producing 573.6 TMT of grains so far with an average yield of 3.04 MT/ha. A year ago at this early stage average yields were 2.78 MT/ha.

Of course winter barley accounts for the vast majority of what has been harvested so far (171.7k ha), producing a crop of 537.2 TMT to date, although a small area of winter wheat is also said to have been cut. Ukraine growers have also begun harvesting winter OSR, the Ministry said.

Chicago Grains Closing Comments - Monday

29/06/15 -- Soycomplex: Beans closed mixed, from up a half cent to down 6 cents. Weekly export inspections of 296,860 MT were a 40% increase from the week before. The USDA reported 2015 US soybean planting at 94% complete, up from 90% a week ago, but still 3 points behind the 5-year average. Kansas has caught up a bit to be 86% planted, although that's still 10 points behind normal. Missouri is only 62% done versus 94% typically at this time. Emergence was placed at 89% versus 94% for the 5-year average. The USDA said that 8% of the crop is now blooming, one point behind the 5-year average. Good to excellent crop conditions fell 2 points from last week to 63% which is now 9 points behind last year at this time. "Big declines for IL (-8%), IN (-9%) and OH (-11%) were reported for a second week and were joined this week by MI (-8%). The soybean crop in OH fell to 44% gd/ex which is down 25% over the past two weeks while IL rating are down 18% over the past two weeks and IN is down 22%," noted Benson Quinn. The trade is now looking to tomorrow's USDA acreage and quarterly stocks report. A Bloomberg survey pegs US 2015 soybean plantings at an average 85.332 million acres versus the USDA's March figure of 84.635 million. The range of guesses is 83.76-86.80 million and plantings in 2014 were 83.701 million. For June 1 US stocks the average estimate is 679 million bushels, from within a range of estimates of 604-773 million and versus 405 million a year ago. "Stocks anything less than 730 million should be bullish as implies USDA is overstating old crop ending stocks," said Benson Quinn. Jul 15 Soybeans closed at $10.02 1/2, up 1/2 cent; Nov 15 Soybeans closed at $9.80, down 6 cents; Jul 15 Soybean Meal closed at $341.90, up $0.60; Jul 15 Soybean Oil closed at 33.05, down 17 points.

Corn: The corn market closed with mostly small losses. Weekly export inspections came in at just over 1 MMT, in line with where they have been for several weeks now. The USDA cut good to excellent corn crop ratings by 3 points to 68%, down from 75% this time last year. "Biggest declines were in the eastern corn belt with -19% in OH, -10% IN and -8 in IL," noted Benson Quinn. "Heavy Midwest rainfall developed from strong thunderstorms once again last week. It was the 4th consecutive week of excessive rainfall in Illinois, Indiana, Ohio and Missouri. The cumulative June rainfall has reached 8 to 12 inches on Midwest farms compared to 4 inches, normally. The new forecast continues wet in a wide swath of the Midwest farm belt from Missouri into Illinois, Indiana and Ohio. The forecast for June 29-July 5 is significantly cooler than previously. This would slow down evaporation in the soggy areas of the Eastern Midwest. Temperatures are predicted to fall 3-6 F below normal," said Martell Crop Projections. The USDA also said that 4% of the 2015 US corn crop is now at the silking stage, half of the 5-year average. A Bloomberg survey estimates 2015 US corn plantings in tomorrow's USDA report at 89.136 million acres, from within a range of guesses of 88.10-91.742 million, little changed versus the March USDA figure of 89.199 million and down 1.6% from last year's 90.597 million. June 1 US stocks are pegged at 4.557 billion bushels. The range of estimates is 4.35-4.70 billion and a year ago stocks were 3.852 billion. Ukraine said that they'd exported 18.8 MMT of corn so far this season. Russia said that they'd exported 2.9 MMT of corn, a 27% drop on a year ago. Jul 15 Corn closed at $3.83 1/4, down 1 3/4 cents; Dec 15 Corn closed at $4.02 1/4, up 1/4 of a cent.

Wheat: The wheat market closed with decent gains, building on Friday's advances. The front month July CBOT contract has now gained 12% in three sessions, noted Agrimoney. This was "a reflection of what is going on with the soft red winter wheat crop, and the disappointing pace of harvest," they said. The USDA reported the 2015 US winter wheat harvest at 38% complete, up from 19% a week ago and not that far behind the 5-year average pace of 46% done at this time. Top producing state Kansas is 48% done compered to 60% normally. They left winter wheat crop conditions unchanged at 41% good to excellent, and raise spring wheat one point to 72% G/E, which is now 2 points ahead of this time last year. They said that 49% of this year's spring wheat crop is headed compared to only 29% typically at this time. The wet weather is causing quality issues with winter wheat, which has pushed Chicago wheat to trade at an unusual premium to the Kansas market. Weekly export inspections of 316,515 MT were fairly modest, but in line with trade estimates. A Bloomberg survey estimated US all wheat plantings for tomorrow at 55.707 million acres, from within a range of guesses of 55.10-56.80 million and versus 56.822 million a year ago and the USDA's March forecast of 55.367 million. US June 1 wheat stocks were seen at 712 million bushels, with a range of estimates of 650-765 million and versus last year's 590 million. Russia said that it had exported more than 30 MMT of grains so far this season, up 19% on a year ago. That includes 21.3 MMT of wheat, a 17% increase compared to 2013/14 and 5.3 MMT of barley, up more than 200% on a year ago. Ukraine said that it had exported 10.83 MMT of wheat so far this season, along with 4.46 MMT of barley. Jul 15 CBOT Wheat closed at $5.80 1/2, up 18 1/4 cents; Jul 15 KCBT Wheat closed at $5.71 1/2, up 12 1/4 cents; Jul 15 MGEX Wheat closed at $6.04, up 8 1/4 cents.

EU Grains Build On Friday's Gains, Greek Tragedy Weakens Euro Further

29/06/15 -- EU grains traded higher, playing catch-up with strong gains posted in US markets on Friday night, and with Paris grains supported by further euro weakness.

At the close, Jul 15 London wheat was up GBP2.90/tonne at GBP117.70/tonne, Sep 15 Paris wheat was EUR4.275/tonne higher at EUR198.50/tonne, Aug 15 Paris corn was up EUR5.25/tonne at EUR178.750/tonne, whilst Aug 15 Paris rapeseed traded EUR0.75/tonne firmer at EUR392.00/tonne.

News that talks between Greece and its creditors failed to reach an agreement (again) over the weekend, and the Greek government have now announced that banks there will be closed all week, with cash withdrawals limited to just EUR60/day to try to prevent a further run on bank deposits, saw the pound rise as high as 1.43 against the euro at one point - a level that hasn't been seen since 2007.

William Hill have apparently closed their book on betting on a Grexit saying that the situation is now too volatile. Others still have Greece remaining in the Eurozone as an "odds-on" favourite, although it's starting to look like not as big a certainty as it was.

Betfair puts it as a 67 percent chance that Greece will stay in the eurozone this year, down from an 86 percent chance only a week ago, report Bloomberg.

The IMF will be anxious to check their post in the morning, with a $1.6 billion Greek repayment falling due. I suspect that they will discover that Finance Minister Yanis Varoufakis was out of the office and unable to sign that one some how.

For now, Barclays maintain their view on a pound/euro exchange rate of 1.45 by the end of the year, rising to 1.47 in Q1 of next year.

Further euro weakness down the line should continue to be friendly for Paris grain prices.

In other news, the Canadian Wheat Board estimate this year's canola crop there at 12.6-13.0 MMT, down 16.5-19.0% on last year's 15.56 MMT, and around 2 MMT below the USDA's current 14.8 MMT forecast.

That's just the latest in a series of downgrades for rapeseed production around the globe this year, with sharp falls in output also being predicted in the UK, France, Germany, Poland, Ukraine and Australia too.

APK Inform reported that Russian seaports exported 198 TMT of grains last week, down from 336.6 TMT the previous week. Last week's total included 156 TMT of wheat, 24.8 TMT of corn and 13.9 TMT of barley.

The Russian Ag Ministry say that this season's grain exports (to Jun 24) are now in excess of 30 MMT, including 21.3 MMT of wheat (a 17% increase on a year ago), 5.3 MMT of barley (up more than 200%) and 2.9 MMT of corn (down 27%).

APK Inform said that Ukraine's seaport grain exports were also down sharply last week, at 233.2 TMT versus 575.8 TMT the previous week. Last week's total included 78.7 TMT of wheat and 154.5 TMT of corn.

The Ukraine Ag Ministry said that the country had now exported 34.36 MMT of grains (to Jun 26) this season. That includes 10.83 MMT of wheat, 4.46 MMT of barley and 18.8 MMT of corn.

They also said that he country had now harvested 280.4 TMT of new crop grains and pulses (mostly winter barley), with yields averaging 2.6 MT/ha, along with 7.2 TMT of winter rapeseed, for which early yields have averaged 1.68 MT/ha.

Chicago Grains Jump - Led By Wheat

26/06/15 -- Soycomplex: Beans closed higher, but were a follower rather than a leader today. Continued wetness means that "the market isn’t expecting much progress over last week concerning planted acres," according to Benson Quinn concerning Monday's crop progress report from the USDA. As of last Sunday night around 8.5 million acres of US soybeans still had to be planted. Last week's figure of 90% sown may have advanced to perhaps 93-94% done it is thought. Once Monday's report is out of the way, we only have one more sleep until we get the USDA's key acreage and quarterly stocks reports due out on Tuesday. A Bloomberg survey pegs US 2015 soybean plantings at an average 85.332 million acres versus the USDA's March figure of 84.635 million. The range of guesses is 83.76-86.80 million and plantings in 2014 were 83.701 million. As of last Sunday only around 76.2 million acres of soybeans were in the ground, and in some cases they were under water. For June 1 US stocks the average estimate is 679 million bushels, from within a range of estimates of 604-773 million and versus 405 million a year ago. The Buenos Aires Grain Exchange said the Argentine 2015 soybean harvest is now 99.6% done, bringing in 60.7 MMT of an estimated record 60.8 MMT crop this year. The weekly Commitment of Traders report shows managed money flipping from a net short of around 63,500 lots to a near 2,000 contract long position for the week through to Tuesday night. "Plenty of shorts are caught on the wrong side in addition to the funds attempting the exit positions," suggested Benson Quinn. That could bring further choppy trade next week in the run-up to these important USDA announcements. In China, the Shanghai Composite closed almost 7.5% lower on Friday "as investors began to show concern about another wave of new listings absorbing liquidity in the market," reported the BBC. In Brazil's state of Mato Grosso, the planting of safrinha soybeans will be prohibited starting with the 2015/16 growing season, and the state of Parana may end up going the same way, says Dr Cordonnier. Mato Grosso has a compulsory 138 day soybean-free period starting on May 1st and ending on September 15th. Parana currently only has a 92-day ban on growing soybeans. Jul 15 Soybeans closed at $10.02, up 1 3/4 cents; Nov 15 Soybeans closed at $9.86, up 8 1/4 cents; Jul 15 Soybean Meal closed at $341.30, up $4.60; Jul 15 Soybean Oil closed at 33.22, down 14 points. For the week that puts Jul 15 beans 30 1/2 cents higher, with Nov 15 up 46 1/4 cents, Jul 15 meal up $18.20 and Jul 15 oil adding 67 points.

Corn: The corn market closed around 8-10 cents higher. Midwest wetness supports the market, which advanced more than 30 cents during the course of the week. A Bloomberg survey estimates 2015 US corn plantings in next Tuesday's USDA report at 89.136 million acres, from within a range of guesses of 88.10-91.742 million, little changed versus the March USDA figure of 89.199 million and down 1.6% from last year's 90.597 million. June 1 US stocks are pegged at 4.557 billion bushels. The range of estimates is 4.35-4.70 billion and a year ago stocks were 3.852 billion. Before we get the new USDA numbers, the trade will be looking at crop conditions in Monday's USDA crop progress report. Ohio good to excellent fell 19 percentage points last week alone, with Indiana down 15%, North Caroline down 11% and Illinois corn falling 6% on the top two categories. The weekly Commitment of Traders report showed that managed money accounts had decreased their net short position by 25,649 contracts for the week through to Tuesday night, but they are still short around 95,000 lots. Those shorts will be feeling a little nervous ahead of the release of next week's USDA numbers. Meanwhile the Midwest is not the only area in the world experiencing excessively wet conditions, say Martell Crop Projections. "China’s top corn province Heilongjiang also is too wet with 150-200% of normal rainfall in recent weeks. Heavy rain that began in mid May has intensified in June, adding up to 200 mm (8 inches) in western Heilongjiang. The eastern province received 165 mm of rainfall. These rainfall amounts are way above average, hampering corn planting efforts. Heilongjiang is the largest corn province in China making up 18-20% of national corn output. A delayed start to the corn spring planting season in Northeast China may lead to trouble, limiting heat units for corn growth and development. The growing season is relatively short due the northern latitude," they say. The Buenos Aires Grain Exchange said that the Argentine corn harvest is 49.1% complete on 1.6 million ha, producing a crop of 13.87 MMT so far, and stood by their estimate for full season output of 25 MMT this year. FranceAgri Mer cut French corn crop ratings by 2 points to 83% good to very good. Coceral estimate this year's EU-28 corn crop down 11% to 65.74 MMT. Output in France, the largest producer in Europe, will fall 9% to 14.89 MMT, they said. Temperatures may near 100F (38C) in corn areas in southern France in the second half of next week, a senior meteorologist at AccuWeather told Bloomberg. Jul 15 Corn closed at $3.85, up 8 1/2 cents; Dec 15 Corn closed at $4.02, up 9 3/4 cents. For the week, Jul 15 corn was up 31 3/4 cents, and Dec 15 added 33 1/4 cents.

Wheat: The wheat market closed with strong gains on the day, and for the week. "We’ve seen a period of generally favorable weather for wheat production around the world, outside of the Plains drought. However, that pattern appears to be over, with talk of heat and dryness in Europe, Russia, Canada and expectations that El Nino will lead it to be a problem in the Australian spring," said Arlan Suderman of Water Street Solutions. That Plains drought has given way to excessive rains, hampering winter wheat harvesting in the US and potentially causing problems for some spring wheat areas later in the season too. As often happens, the hot and dry weather on the US Plains earlier in the season, seems to mean that protein levels are high this year though, even if bushel weights are lower than had been hoped for in what has been harvested so far. French winter wheat conditions are in decline, cut by 4 points in the good to very good category by FranceAgriMer today, having been dropped 2 points the previous week. Conditions are however still better than they were this time a year ago, but the concern now is that further serious heat due next week could cause more damage. Spain's Cooperativas Agro-Alimentarias meanwhile slashed their crop production estimates for wheat and barley compared to what they were hoping to achieve only a month ago. They now have the Spanish wheat crop estimated down 14% year-on-year at 4.92 MMT, well below the 7.53 MMT that they were predicting in May.  The Buenos Aires Grain Exchange were unchanged on their estimate for Argentine winter wheat plantings at 3.9 million ha. Coceral today estimated the EU-28 soft wheat crop down 5.2% on last year at 140.62 MMT, with all wheat production down 4.9% at 148.22 MMT. The EU-28 barley crop was pegged down 5.8% at 56.68 MMT. A Bloomberg survey estimated US all wheat plantings for Tuesday at 55.707 million acres, from within a range of guesses of 55.10-56.80 million and versus 56.822 million a year ago and the USDA's March forecast of 55.367 million. US June 1 wheat stocks were seen at 712 million bushels, with a range of estimates of 650-765 million and versus last year's 590 million. "The situation for Western Canadian wheat production is dire as temps will be well above normal through much of next week," said Benson Quinn. Rabobank said that they see the potential for “considerable price volatility” related to El Nino in global wheat prices in August and September when Australian yields are determined on east coast. Jul 15 CBOT Wheat closed at $5.62 1/4, up 30 1/4 cents; Jul 15 KCBT Wheat closed at $5.59 1/4, up 24 cents; Jul 15 MGEX Wheat closed at $5.95 3/4, up 21 1/4 cents. For the week, that puts Chicago wheat up 73 3/4 cents, with the Kansas market adding 56 cents and Minneapolis gaining 52 3/4 cents.

EU Grains Post Solid Gains In High Volume Trade

26/06/15 -- EU grains closed with solid gains on the day, and for the week. A combination of sharply higher US markets, deteriorating EU weather conditions and the weak euro in the face of the as yet failure to reach an accord with Greece, were all supportive today.

At the close Jul 15 London wheat was up GBP3.75/tonne to GBP114.80/tonne, Nov 15 was EUR3.25/tonne higher at GBP128.80/tonne, Sep 15 Paris wheat jumped EUR8.75/tonne higher to EUR194.25/tonne, Aug 15 Paris corn was up EUR4.50/tonne at EUR173.50/tonne, whilst Aug 15 Paris rapeseed climbed EUR3.75/tonne to EUR391.25/tonne.

For the week, Jul 15 London wheat gained GBP3.80/tonne, or 3.4%, and Nov 15 rose GBP6.30/tonne, or 5.1%. Sep 15 Paris wheat meanwhile closed the week EUR15.75/tonne higher than it began it, for a net weekly gain of 8.8%. Aug 15 corn added EUR11.75/tonne, or 7.3%, during the course of the week and Aug 15 Paris rapeseed rose EUR12.00/tonne, or 3.2%.

New crop Nov 15 London wheat posted a GBP4.50/tonne trading range today, and traded as high as GBP131.00/tonne at one stage, it's best levels since early April - but was only able to hold onto some of those advances at the finish. Well over 1,000 lots of the benchmark contract changed hands during the session.

The most active Dec 15 Paris wheat contract meanwhile managed to settle just half a euro off the session high of EUR196.50/tonne, up EUR8.25/tonne on the day, with over 162k lots traded.

A very hot and dry forecast for much of Europe next week and beyond, plus a continuing over-wet outlook for US grains in the Midwest, has sent market shorts scrambling to cover in some of their exposure this week.

Much of Europe is set to swelter under temperatures as much as 10C higher than normal over the next two weeks, with rainfall totals also generally set to remain light.

FranceAgriMer today cut the proportion of the French winter wheat crop rated good to very good by four percentage points to 81%. Some 23% of the French crop is now officially rated in the highest "very good" category, down from 36% at the end of May. The heat and dryness is clearly affecting wheat more than the more mature winter barley crop, for which good to very good ratings were left unchanged at 85%. Spring barley was cut to 79% good to very good from 82% a week ago, and corn was pegged at 83% in the top two categories versus 85% a week ago.

It's far from a disaster just yet, but it warrants attention, and if the current forecast verifies then further downgrades look likely over the next couple of weeks.

The 2015 French winter barley harvest is 4% done nationally, with the Poitou-Charentes region 15% done, followed by 11% of the crop in the Centre region. Around 3% if the 2015 French winter wheat crop has been cut in the Midi Pyrenees area of the country, they said, although the rest of the country is still to start.

Spanish production hopes meanwhile have gone downhill rapidly this month. Cooperativas Agro-Alimentarias pegged soft wheat output there this year down 14% at 4.92 MMT. That number is all the more startling when you consider that in May they were predicting production to rise 31% to 7.53 MMT, say Bloomberg.

The outlook for the Spanish soft-wheat crop in Castilia and Leon, the two largest growing regions, was cut to 2.27 MMT from the 3.71 MMT predicted in May, they said.

This year's Spanish corn crop is now estimated to decline 8.8% to 4.27 MMT, barley production this year is still seen rising 1.1% year-on-year to 6.69 MMT they were calling that crop as high as 8.44 MMT only a month ago.

Temperatures may near 100F (38C) in corn areas in southern France in the second half of next week, a senior meteorologist at AccuWeather told Bloomberg. The south east of the UK meanwhile could also see the mercury rise as high as 35C, next Wednesday/Thursday, some are predicting.

UK production prospects still look good, although some cereal crops on light land have started to show visual symptoms of moisture stress, said the HGCA.

Coceral today estimated the EU-28 soft wheat crop down 5.2% on last year at 140.62 MMT, with all wheat production down 4.9% at 148.22 MMT. The EU-28 barley crop was pegged down 5.8% at 56.68 MMT, with corn production seen falling 11% to 65.74 MMT. EU rapeseed production this year was forecast 11.3% lower at 21.38 MMT.

Coceral have the UK wheat crop at 14.96 MMT, down 9.4% on last year, with yields averaging 8.0 MT/ha versus 8.55 MT/ha a year ago. The UK barley crop is estimated at 6.66 MMT, down 5%, and the UK rapeseed crop was forecast at 2.27 MMT, down 9.6% compared to 2014.

In Germany, another country that has been affected by heat and dryness, soft wheat production this year was called 10.5% lower at 24.89 MMT, with barley output down 13.2% at 10.12 MMT and the rapeseed crop down 19.2% at 5.06 MMT.

In other news, Brussels granted 361 TMT worth of soft wheat export licences this week, taking the total for the season to 31 MMT, up almost 12% versus 27.7 MMT a year ago.