EU Grains Closing Comments

26/06/12 -- EU grains closed mixed with Jul 12 London wheat up GBP2.00/tonne to GBP190.00/tonne and Nov 12 GBP0.20/tonne lower at GBP167.80/tonne. Aug 12 Paris wheat closed EUR6.50/tonne firmer at EUR226.50/tonne, whilst Nov 12 was EUR1.00/tonne higher at EUR226.00/tonne.

Jul 12 London wheat posted another fresh high in more than a year as old crop remains tight and new crop availability looks further away than was anticipated a month or two back. Open interest is pretty thin in the contract, but it's the longs who are holding the aces it would seem.

Hot and dry conditions in the US are the main market driver at the moment, although with the winter wheat harvest past halfway and spring wheat largely escaping the worst of the weather at 77% good/excellent last night this is much more of a corn and soybean problem than a wheat one. Nevertheless wheat is more than happy to go along for the ride.

The EU Commission research unit MARS say that EU-27 wheat yields will be very similar to last season and the 5-year average at 5.32 MT/ha, with gains this month in France, Germany and the UK balanced by losses in Spain.

In France "abundant rainfall and (a) temperature increase during May and June depict a promising scenario for winter and spring cereals," they say.

"Cereals in major regions of the UK keep a higher-than-normal green biomass despite the tough weather conditions they have been subject to. However, disease pressure is expected to be high, given the continued rainfall, with an additional uncertainty on how it will managed," they add.

They now estimate UK wheat yields to average 8.16 MT/ha this year, which would be the second highest on record, and with a planted area of just under 2 million ha would suggest a crop of around 16.2 MMT this year. That would be around 5.3% up on last year.

French wheat yields are seen increasing 8.4%, with German yields up by 4.2%.

UK barley yields are forecast 2.6% higher at 5.81 MT/ha, with French yields coming in 13.2% up on last year and German yields rising 6.1%.

UK rapeseed yields are pegged at 3.34 MT/ha, 14.5% down on last year's record 3.91 MT/ha. French yields are forecast down 3%, but German yields are seen rising almost 20% on last year's drought-ravaged crop.