EU Wheat Ends At Lowest In More Than A Month

27/09/12 -- EU grains ended lower with Nov 12 London wheat GBP2.85/tonne easier at GBP197.95/tonne and with Nov 12 Paris wheat EUR3.25/tonne weaker at EUR258.00/tonne.

The markets were on the defensive, retreating further from recent highs, with Nov 12 London and Paris wheat both closing at their lowest levels in more than a month, nervous ahead of a stocks report from the USDA due tomorrow.

French wheat did derive some support from a strong showing in this week's Egyptian tender and the weak euro, which was under pressure on ideas that a Spanish bailout request may not be too far away.

The harvest in the Black Sea is drawing to a close, with Ukraine saying that it had harvested 30 MMT of grains off 75% of the planted area as of Sep 21. It's mostly corn that is now left standing, with production prospects in the west looking better than last year, according to local agronomist Mike Lee.

Russia's harvest meanwhile currently stands at 65 MMT off 79% of the planted area, including 38 MMT of wheat and 14 MMT or barley. Kazakhstan's grain harvest is more than 95% complete at 13.8 MMT.

Ukraine has exported 4.7 MMT of grains so far in 2012/13, an increase of 63% on this time last year. Of that total 2.4 MMT is wheat (up 78%), 1.1 MMT barley (down 28%) and 1.3 MMT corn.

Black Sea plantings are said to be progressing well, with better moisture levels than a year ago. Ukraine winter grain plantings are currently at 4.1 million hectares versus 3.76 million this time last year. Russian farmers plan to sow 16.8 million ha of winter grains this year, up 4% from 16.1 million last year. Winter grains have so far been planted on 10.84 million ha versus 9.45 million this time last year.

Brussels issued a respectable 365 TMT of soft wheat export licenses this week, bringing the year-to-date total to 3.29 MMT.

In what seems to be a cost saving exercise, Morocco announced that it was reducing the subsidy paid to local millers to buy imported wheat. That may mean domestic bread prices rising, and could also affect demand for foreign wheat, although the country is said to have an annual wheat deficit of around 3-4 MMT.

The HGCA said that the UK wheat harvest is 98% complete, with 15% of the spring barley crop and 20% of spring OSR still left in the fields.

They cut their average wheat yield estimate slightly from 6.9-7.2 MT/ha to 6.8-7.2 MT/ha, well down on the 5-year average of 7.8 MT/ha. "The expectation (is) that the final value is towards the lower end of this range," they said.

"Yields have been very variable but generally much lower than average by 10-15%," they added.

Winter barley yields are thought to have fared better, coming in slightly ahead of the 6.3 MT/ha 5-year average at 6.4-6.6 MT/ha. Spring barley yields are a bit worse than normal at 5.1-5.3 MT/ha, versus the 5-year norm of 5.4 MT/ha.