EU Grains Trade Higher On Consolidations, But Trend Remains Down

30/07/15 -- EU grains trade a little higher this morning, consolidating somewhat following the recent rout.

Nov 15 London wheat is up GBP0.40/tonne to GBP121.00/tonne, Sep 15 Paris wheat is EUR0.75/tonne firmer at EUR180.50/tonne, Aug 15 Paris corn is EUR1.50/tonne higher at EUR175.25/tonne, whilst Aug 15 Paris rapeseed is up EUR2.25/tonne at EUR370.25/tonne.

The London and Paris wheat markets had fallen more than 8% in the past three weeks as of last night's close, whilst Paris rapeseed had fallen by over 5% in the same period. Paris corn meanwhile was down more than 10% over the past four weeks.

You can't call today's action a reversal, but it may be safe to say that some consolidation was overdue, even if the trend still appears to be lower on harvest pressure and the usual stiff competition from the Black Sea that we generally see at this time of year.

The latter continue to be aided by their respective weak domestic currencies. The Russian rouble is down by 6.7% against the US dollar so far this month, with the Ukraine hrvynia falling by 5.4% versus the US currency in the same period.

Reuters report that cheap Black Sea feed wheat is "flooding" into the Asian market, knocking Brazilian corn out of feed rations.

The Philippines, South Korea and Thailand thought to have bought around 3 MMT of Black Sea feed what for Jul/Dec shipment recently, they say.

The former most recently booked 100 TMT of Ukraine feed wheat for Sep/Oct delivery at prices said to be around $210-220 including freight. Knocking off the freight and converting that back to sterling that's roughly the equivalent of where the London feed wheat future currently trades, but on the basis of already loaded onto a boat in Odessa.

The Russian grain harvest is 21.9% complete on 10.2 million ha, which is 22% behind last year's pace. That's produced a crop of 35.4 MMT to date. Average yields at 3.47 MT/ha are still ahead of this time last year (3.43 MT/a), but now only just.

There are clear signs that, as the pace picks up away from the more productive areas in the south of the country, that we will start to see this average slip to below last year's levels.

The Russian wheat harvest is said to be 29.3% complete on 7.8 million ha, which is 23.5% down on this time last year. That's produced a crop of 28.4 MMT so far, with national yields at 3.66 MT/ha versus 3.63 MT/ha a year ago.

A Bloomberg survey provisionally pegged the EU-28 corn harvest at 63.3 MMT this year, with the French harvest at 14 MMT, Italy at 7.5 MMT and Romania at 10.7 MMT.

That's lower than last month's Coceral forecast, reflecting recent heat and dryness. They were at 65.7 MMT in June versus 73.8 MMT a year ago. That included a French estimate of 15.5 MMT, which appears to be where the worst of the losses are thought to most likely have occurred.

MDA CropCast today cut their EU-28 corn production forecast by 0.95 MMT on a week ago. They now only see this year's crop at 59 MMT.

On the international tender front, Tunisia are said to have bought 84,000 MT of optional origin soft milling wheat in a tender for 134,000 MT.

Chicago Closing Comments - Wednesday

29/07/15 -- Soycomplex: Beans closed mixed, higher on the nears and lower on new crop. After a 10% fall over the last 2 days the Shanghai Composite Index was up 3.4% today. Argentina's Ag Ministry said that the country had crushed a record 18.5 MMT of soybeans in the first half of 2015. They also said that Argentine growers are 59.5% sold on their 2014/15 soybean crop versus 49.2% committed this time a year ago. South Korea tendered for 60,000 MT of US/South American soy meal for November delivery. The GFS weather model is giving wetter than normal for the western corn belt, and generally drier than normal in the eastern half for the period through to Aug 13. Temperatures are forecast to be normal to cooler than normal everywhere but the southeast of the US. Cool August temperatures would normally be regarded as beneficial for crops, particularly beans as August is regarded as the critical yield determining month. New crop beans and meal should get a demand boost from a much tighter global rapeseed S&D situation in 2015/16. The Canadian Ag Ministry forecast a 2015 canola crop there of 14.3 MMT, down 1.7 MMT on their previous forecast and 1.3 MMT less than last year. They trimmed 0.8 MMT off their 2015/16 Canadian canola export forecast, taking that down to 7.6 MMT, which would be 1.6 MMT below 2014/15. Trade estimates for tomorrow's weekly export sales report are between 500 TMT to 1 MMT for both marketing years combined. Aug 15 Soybeans closed at $9.83, up 8 1/4 cents; Nov 15 Soybeans closed at $9.43 1/4, down 1 1/2 cents; Aug 15 Soybean Meal closed at $350.00, up $4.80; Aug 15 Soybean Oil closed at 30.21, down 45 points.

Corn: The corn market closed around 7 cents lower. The US Energy Dept had weekly US ethanol production down 8,000 barrels per day from the previous week to 965,000 bpd. The Argentine Ag Ministry said that growers there are 62.4% sold on their 2014/15 corn crop versus 53.5% committed this time a year ago. As well as being wetter than normal. July temperatures in the Midwest have also largely been cooler than average for the month. "The time worn adage is that 'rain makes grain' boosting corn yields in the critical July pollination period. However, the 2014 summer growing season proved that coolness may be more influential for corn for boosting yields. Midwest temperatures in July 2014 were 4 F below average, leading ultimately to a record harvest. The national average corn yield finished with 171 bushels per acre, 7% above trend. This was a surprising result, since rainfall was below average during the critical July pollination stage," said Martell Crop Projections. "A record corn yield was achieved in 2009 also, 9% above trend, bolstered by record cool July temperatures. Another “super cool” July in 1992 promoted favourable corn yields also 8.3% above trend (average). July coolness has been proven to be beneficial for corn yields, as the cooler temperatures reduce evaporation from the soil surface. This helps to conserve ground moisture in corn during the critical pollination stage," they add. Could this ultimately also prove to be true in 2015? The market seems to think that it might. Trade estimates for tomorrow's weekly export sales report are around 500-800 TMT. Sep 15 Corn closed at $3.67 3/4, down 7 1/4 cents; Dec 15 Corn closed at $3.78 1/4, down 7 1/4 cents.

Wheat: The wheat market closed lower across the board. The Wheat Quality Council's spring wheat crop tour is underway, and said to be reporting some of the best potential wheat yields in years. The official tour estimate is expected to be out on Thursday. The day one yield of 51.1 bushels/acre, was up from the 2014 figure of 48.3 bu/acre, and the five year average of 43.4 bu/acre. It was also the highest in a tour history going back to 1994. This comes at a time when demand for US wheat is already slack, and right in the middle of the wheat harvest in the Black Sea region. Ukraine said that it had harvested 18.3 MMT of wheat so far and that yields were a bit better than last year. Russia said that it had harvested 27.7 MMT of wheat to date, and that its yields were also up a little compared to 12 months ago. The Argentine Ag Ministry said that growers there are 87.8% sold on their 2014/15 wheat crop versus 64.0% committed this time a year ago. Colombia are said to be in the market seeking wheat. Japan are tendering for 120,000 MT of feed wheat and 200,000 MT of feed barley for November shipment. Tunisia are looking for 134,000 MT of optional origin milling wheat. Morocco said that it had/would produce a record wheat harvest in 2015, and that it's import needs would therefore be reduced. Egypt’s Supply Minister said that the country has enough wheat stocks bought to last it for the next six months. These sort of statements are routine, and don't rule them out of tendering again in the market very soon, especially on this latest break in prices. Trade estimates for tomorrow's weekly export sales report are 350-600 TMT. A figure below this level would be another nail in the coffin for US wheat. Sep 15 CBOT Wheat closed at $4.96 1/4, down 14 1/2 cents; Sep 15 KCBT Wheat closed at $4.95 1/4, down 9 1/2 cents; Sep 15 MGEX Wheat closed at $5.29 1/2, down 10 3/4 cents.

EU Grains Mostly Lower As Bearish Run Continues

29/07/15 -- EU grains closed generally lower, as the bearish run in the sector continues.

At the close of play, Nov 15 London wheat was down GBP1.40/tonne to GBP120.60/tonne, Sep 15 Paris wheat fell a EUR2.50/tonne to EUR179.75/tonne, Aug 15 Paris corn was down EUR2.75/tonne to EUR173.75/tonne, whilst Aug 15 Paris rapeseed was EUR1.50/tonne lower at EUR368.00/tonne.

The harvest in the UK, France, Germany and Italy has stalled on rain, although there's a drier forecast ahead for the next few days through to Saturday. After that though rains return for much of Western Europe, in the forecast lasting through to Aug 13, with Spain particularly wet - set to receive 4-8 times its normal rainfall for the time of year.

That may help struggling corn crops in the region. In Germany Deutsches Maiskomitee say that the variation in this year's corn crop is "enormous" with plants ranging from waist high to exceeding 2m in height.

That makes predicting the size of this year's crop particularly difficult, they say.

Morocco estimated it's 2015 grain crop at a record 11.5 MMT due to increased plantings and higher than normal rainfall. Wheat (excluding durum) production will come in at a record high 5.6 MMT, which beats the previous 2013 record by 0.5 MMT.

The country said that it will also harvest 2.4 MMT of durum and 3.5 MMT of barley this year, meaning that its grain import requirements will fall in 2015/16.

Russia's 2015 grain harvest now stands at 34.5 MMT so far off 9.8 million ha, which equates to 21.1% complete. Yields are said to have averaged 3.51 MT/ha versus 3.44 MT/ha a year ago.

Of the total Russian harvest so far, wheat is said to be 28.1% complete producing a crop of 27.7 MMT to date.

That's not quite the full story though, there's a sharp difference between yields this year and last when looking at the advanced harvest in the most productive south of the country and the drier areas further north.

Russia's Southern District is 61% harvested on 4.8 million ha, with production at 18.9 MMT and yields averaging 3.93 MT/ha versus 3.69 MT/ha a year ago. The North Caucasus region is 74.3% harvested on 2.2 million ha producing a crop of 8.3 MMT so far, with yields at 3.78 MT/ha compared to 3.66 MT/ha a year ago.

Further north though, the harvest in the Central region is only 7.8% complete so far and yields here are only averaging 1.67 MT/ha against 2.12 MT/ha a year ago. In the Far Eastern region, where the harvest is only just getting going, early yields are 1.34 MT/ha versus 2.31 MT/ha in 2014.

That suggests that final national average yields could be dragged down below last year's levels as the harvest becomes more advanced in these less productive areas.

In Ukraine, the early grain harvest is 73% complete producing 18.3 MMT of wheat, 6.6 MMT of barley and 1.5 MMT of rapeseed to date. Yields of wheat and barley are said to be a bit higher than last year.

Tunisia are tendering in the market for 134 TMT of optional origin milling wheat, with French material probably the favourite to win the business.

Chicago Grains Stage Modest Turnaround Tuesday

28/07/15 -- Soycomplex: Beans closed higher, in a Turnaround Tuesday style of sorts. The recovery was only a partial one of what was lost yesterday though. The USDA didn't raise good to excellent crop ratings in last night's report, which was contrary to general expectations. They said that 71% of the crop is blooming, one point behind the 5-year average and that the proportion of the crop setting pods is 34%, double that of a week ago and 3 points ahead of the 5-year average. The Chinese stock market was down another 1.5% today, making for a 2-day loss of 10%. They are of course far and away the world's largest soybean buyer, being expected to account for almost two-thirds of global soybean trade in 2015/16, according to current USDA forecasts. Oil World said that due to sharply lower EU and world rapeseed/canola production this year the oilseed's premium over soybeans will continue to widen. Rapeseed oil should trade higher than soybean oil throughout most of 2015/16, they said. That also suggests that the relationship between rapeseed meal and soybean meal could stay skewed outside of what might be considered to be the "traditional" range. Oil World see EU soybean imports seen rising 4.5% to 14.5 MMT in 2015/16, with soybean meal imports up 3.9% to 21.5 MMT, reported Bloomberg. EU rapeseed imports are estimated up 8.6% to 2.64 MMT in 2015/16, they added. Ukraine, typically a large exporter to Europe, is 81% complete on it's 2015/16 rapeseed harvest producing a crop of 1.4 MMT to date, suggesting final output of around 1.7 MMT versus 1.8 MMT currently from the USDA and down 23% on a year ago. Aug 15 Soybeans closed at $9.74 3/4, up 13 1/2 cents; Nov 15 Soybeans closed at $9.44 3/4, up 11 1/2 cents; Aug 15 Soybean Meal closed at $345.20, up $1.00; Aug 15 Soybean Oil closed at 30.66, up 55 points.

Corn: The corn market staged a modest couple of cent recovery following yesterday's rout. Unlike with soybeans, the USDA did raise corn crop ratings in line with trade ideas - up one point to 70% good to excellent. They said that 78% of the crop is silking, up from 55% a week ago and versus 77% typically at this time. In addition 14% of the crop is at the dough stage versus 17% on average for this week. The ten and thirty year average for this week in the crop year (week 30) in the good to excellent category is 61% and 64% respectively, say Benson Quinn. All in all things are pretty good then really. Crop conditions were 5 points better than this a year ago and that harvest went on to break all previous records by the proverbial country mile. "Last year, it was Iowa farmland that flooded in June with 10 inches of rainfall. However, while flooding set back corn development, the final result was surprisingly good. Iowa corn yields averaged 178 bushels per acre, and 2% above average (trend). Iowa corn gradually recovered last season with exceptional July coolness and below average rainfall. How do current weather conditions compare? Temperatures this summer have been moderately cool in July, though not nearly as cool as last year in the Midwest," noted Martell Crop Projections. Ukraine remain busy exporting corn, with 831 TMT of the grain already shipped out this month. The Ukraine Ag Ministry are forecasting the country to export a new record grain volume in 2015/16, with corn shipments at around 19.8-21 MMT. The USDA currently only estimate these at 16 MMT, down 2 MMT from 18 MMT in 2014/15. South Korea's MFG bought 139,000 MT of optional origin corn for Dec-Jan shipment in a tender. The USDA reported 120,000 MT of sorghum sold to China, with delivery split between both crop years. There remains talk of Beijing looking to do something to restrict sorghum imports in favour of shifting some of their own huge domestic corn stocks. Sep 15 Corn closed at $3.75, up 2 cents; Dec 15 Corn closed at $3.85 1/2, up 2 cents.

Wheat: The wheat market closed higher, recovering most of yesterday's losses. The USDA now have the 2015 US winter wheat harvest at 85% complete, up 5 points on the 5-year average. The spring wheat harvest is 2% done, which is 3 points behind the average for this time. Spring wheat crop conditions were up one point in the good to excellent category. A Wheat Quality Council’s spring wheat tour started today and ends on Thursday. Scouts are surveying fields in the Dakotas and Minnesota. "The first leg of the wheat tour notes yield potential above a year ago with one potential exception being a leg of the tour that went through Northern SD, but still recorded a yield in the neighborhood of 55 bpa vs. 65 bpa the prior year. The reports I have seen do not indicate that disease pressure is anything more than routine," said Benson Quinn's Brian Henry. India are said to have imposed a 10% import duty on wheat, the first such move in 8 years. The hope/aim is encourage local millers to use more of the government's stocks, the quality of which is usually questionable at best, and that's in a good year. This year's harvest was hit by rain and hail just before it started, cutting quality and leading to a rash of early season imports of mostly Australian wheat to blend in with their own inferior crop. The USDA's FAS raised their estimate for the Russian 2015 grain crop to 97 MMT, down 6% on a year ago. That includes 56 MMT of wheat, which is 3 MMT less than a year ago. They see grain exports in 2015/16 at 29 MMT, of which 21 MMT will be wheat. The Russian Ag Ministry said grain production could exceed 101 MMT this year. UkrAgroConsult estimated the Russian grain crop at 98 MMT, down 2 MMT from previously. That includes 57.5 MMT of wheat. They trimmed their 2015/16 Russian grain export forecast from 30 MMT to 28 MMT, of which 20 MMT will be wheat (down from 20.5 MMT previously). Sep 15 CBOT Wheat closed at $5.10 3/4, up 8 1/4 cents; Sep 15 KCBT Wheat closed at $5.04 3/4, up 5 1/2 cents; Sep 15 MGEX Wheat closed at $5.40 1/4, up 3 1/4 cents.

EU Grains Recover Some Of Monday's Losses

28/07/15 -- EU grains bounced mostly higher today, recovering some (but by no means all) of yesterday's losses.

At the close Nov 15 London wheat was up GBP0.50/tonne at GBP122.00/tonne, Sep 15 Paris wheat was EUR0.75/tonne higher at EUR182.25/tonne, Aug 15 Paris corn was down EUR0.75/tonne to EUR176.00/tonne, whilst Aug 15 Paris rapeseed was EUR4.25/tonne lower at EUR369.50/tonne.

The EU Commission's MARS unit appeared to confirm yesterday what the trade was already thinking - that the recent heat and dryness in Europe will ultimately prove to be more of a problem for corn at the pollination stage than for more mature wheat or barley, for which the threat came generally just a little too late.

They did trim their estimates for EU-28 average yields for wheat, barley and OSR from a month ago, but not by much. Yields will however still be down on last year's bumper levels.

Wheat yields in the bloc are now seen averaging 5.57 MT/ha versus 5.62 MT/ha a month go, and down 5.6% on a year ago. Barley yields were pared back from 4.65 MT/ha to 4.61 MT/ha, down 7.1% compared to 2014. OSR yields were estimated at 3.23 MT/ha versus 3.28 MT/ha a month ago, down 10.8% versus last year.

For corn however this month's drop was more severe, with yields cut from a previous 7.22 MT/ha to 6.71 MT/ha, now down 16.9% on a year ago.

In France, wheat yields were estimated at 7.25 MT/ha (versus 7.41 MT/ha in June and 7.36 MT/ha in 2014), in Germany it was 7.66 MT/ha (versus 7.77 MT/ha and 8.63 MT/ha respectively) and in the UK it was 8.07 MT/ha (versus 8.14 MT/ha and 8.58 MT/ha).

For the record UK barley yields were estimated at 6.09 MT/ha from 6.12 MT/ha previously and 6.4 MT/ha in 2014. UK OSR yields were pegged at 3.73 MT/ha, up from 3.70 MT/ha last month and also last year.

French corn yields were cut from 9.39 MT/ha in June to 8.63 MT/ha this time round, a fall of 13.9% compared to 2014.

The harvest in the FSU meanwhile is advancing, and competition from the region remains fierce.

In Ukraine the early grain harvest is now 69% complete on more than 7 million ha producing a crop of 23.66 MMT to date, with yields at 3.36 MT/ha versus 3.33 MT/ha in 2014. Wheat accounts for 16.93 MMT of that total (with harvesting 68% complete).

The Ukraine Ag Ministry said that the country had now exported 1.87 MMT of grains so far in this new season, of which 492 TMT was wheat, 831 TMT corn and 548 TMT barley. There's a further 319 TMT already loaded waiting to leave, so total exports should top 2 MMT this month.

A senior Ukraine Ag Minister said that he expects the country to export a record 37 MMT this season, up from 34.6 MMT in 2014/15.

The USDA FAS in Russia increased their estimate for this season's grain crop to 97 MMT, which is 6% down on last year.

They see exports this season at 29 MMT versus 30.9 MMT in 2014/15, including 21 MMT of wheat.

Predictably the Russian Ag Ministry are a bit more bullish, saying that production could exceed 101 MMT this year (105.3 MMT in 2014).

Agritel report that the recent slump in value of the Russian rouble, linked to falling global oil prices, means that domestic wheat prices are now above the level where anything other than a nominal RUB50/tonne export duty kicks in. Based on current prices a duty of around $3.50/tonne is payable by the exporter, they calculate.

That could increase further if more rouble depreciation lies ahead of course.

Chicago Grains Trade Lower, Catching Fund Money On Wrong Side

27/07/15 -- Soycomplex: Beans began the week with heavy losses losses. Concerns about the Chinese economy drove the Shanghai Composite to post it's largest one day fall in more than 7 years today, prompting a wholesale commodity sell off. Fund money seems to be caught on the wrong side of this one, they were net long around 90,000 soybeans contracts in Friday's commitment of traders report. An improved US weather outlook adds to the bearish tone. "Drier weather forecasts are just what the doctor ordered for the rain saturated eastern Midwest corn and soybean crops. This week will be warmer with normal to below rainfall," said Benson Quinn. The trade is thinking that the USDA might increase soybean good to excellent crop ratings later today. Pakistan are said to have bought 126,000 MT of soybeans of South American origin overnight. At the close Aug 15 Soybeans finished at $9.61 1/4, down 30 cents; Nov 15 Soybeans closed at $9.33 1/4, down 31 3/4 cents; Aug 15 Soybean Meal closed at $344.20, down $10.60; Aug 15 Soybean Oil closed at 30.11, down 37 points.

Corn: The corn market also trades with double digit losses. Fund money has come off particularly badly in this break in corn prices, they were revealed to have added almost 77,000 contracts to their net long position in Friday's commitment of traders report, and are now net long to the tune of almost 280,000 lots. Ouch! South Korea are tendering for 70,000 MT of optional origin corn. The EU Commission's MARS unit cut their forecast for EU-28 corn yields from 7.22 MT/ha to 6.71 MT/ha today. That's now down sharply on 8.07 MT/ha a year ago and below the 5-year average of 7.02 MT/ha. "Prolonged and intense heat waves in July affected important cropland areas in northern Italy, France, Germany, Poland, the Czech Republic, Austria and Hungary. Maximum temperatures often exceeded 35°C and locally reached 40°C, hitting spring and winter crops during grain filling and maize while flowering," they said. The USDA are thought likely to increase good to excellent corn ratings by one or two points later today. Sep 15 Corn closed at $3.73, down 19 1/2 cents; Dec 15 Corn closed at $3.83 1/2, down 19 1/4 cents.

Wheat: The wheat market trades around 4-5 cents lower. MARS trimmed EU soft wheat yields a little, down from 5.85 MT/ha a month ago to 5.80 MT/ha. Ukraine said that their 2015 early grain harvest was 69% complete on 7 million ha, with yields averaging 3.36 MT/ha. That includes 4.7 million ha of wheat, producing a crop of 16.9 MMT so far. The Ukraine barley harvest is 76% complete at 6.25 MMT. Jordan tendered for 100,000 MT each of optional origin wheat and barley for Nov/Dec delivery. The Mexican wheat crop this year will come in at around 3.7 MMT, similar to a year ago, according to the USDA's FAS. Domestic consumption will rise from 6.85 MMT to 7 MMT in 2015/16, they say. Despite that imports will fall from 4.5 MMT to 4.4 MMT, they predict. Canada said that they'd exported 16.8 MMT of wheat (excluding durum) in the first 50 weeks of 2014/15, a similar level to a year ago. Durum exports were 4.5 MMT versus 4.7 MMT a year ago, and barley exports were 1.4 MMT against 1.3 MMT in 2013/14. Sep 15 CBOT Wheat closed at $5.02 1/2, down 9 1/4 cents; Sep 15 KCBT Wheat closed at $4.99 1/4, down 8 cents; Sep 15 MGEX Wheat closed at $5.37, down 8 cents.

EU Grains Open The Week In The Red

27/07/15 -- Even before EU markets opened, the overnight US grains were trading heavily into the red following an 8.5% fall in the Chinese stock market - the largest one day drop since 2007 - on renewed concerns over the economy there.

With Europe now in the middle of harvesting, that was all it needed to see London and Paris grains begin the week in defensive mode.

At the close Nov 15 London wheat was GBP1.80/tonne lower at GBP121.50/tonne, Sep 15 Paris wheat was EUR4.25/tonne easier at EUR181.50/tonne, Aug 15 Paris corn was EUR1.75/tonne lower at EUR176.75/tonne and Aug 15 Paris rapeseed slumped EUR10.50/tonne at GBP373.75/tonne.

Reuters say that the 2015 French wheat crop should come in at, or up to 1MMT above, last year's 37.5 MMT harvest despite recent dryness.

French wheat yields in the north are surprisingly good, as too are hagberg levels - unlike last year. Proteins are mixed however.

FranceAgriMer said on Friday that the French wheat harvest was 60% done as of last Monday, it's probably about 75% complete now.

The German wheat harvest is gathering pace, but with only an average crop expected, compared to last year's bumper harvest. There's "no clear picture yet" on quality, Reuters say. Agritel estimate production down 10% at 24.9 MMT.

The Polish wheat harvest is underway, but slowed by recent rain. Widespread harvesting won't begin until August though. That could come in at around 10.6 MMT, down 15% on last year, say Sparks Polska.

The UK wheat harvest is estimated around 14.5-15.5 MMT versus 16.6 MMT last year, but above the 5 year average of 14.4 MMT, Reuters say.

The UK barley harvest has now progressed north of the M62 judged by my weekend observations.

Ukraine said that it had exported 1.74 MMT of grains already this season, with a further 207,000 MT loaded and waiting to go.