EU Grains Slide Further Into The Mire As Harvest Begins In FSU

14/06/13 -- EU grains slumped to fresh lows for the current move, with London wheat down to front month levels not seen since February 2012 and Paris wheat at its lowest since January 2012. The last time Paris rapeseed prices were at this level meanwhile was November 2011.

Jul 13 London wheat finished the day GBP3.25/tonne lower at GBP163.25/tonne, and with Nov 13 ending GBP3.20/tonne down at GBP165.30/tonne. Nov 13 Paris wheat settled EUR1.50/tonne easier at EUR196.25/tonne. Aug 13 Paris rapeseed was EUR2.50/tonne weaker at EUR416.75/tonne.

At the end of another brutal week for European grains we see Jul 13 London wheat down GBP10.75/tonne versus last Friday and Nov 13 GBP9.95/tonne easier. Nov 13 Paris wheat lost EUR7.50/tonne on the course of the week and Aug 13 Paris rapeseed shed EUR9.50/tonne.

Brussels issued 160 TMT of soft wheat export licenses this past week, bringing the 2012/13 marketing year total to 18.4 MMT, up by almost 50% on this time a year ago. Whilst that might sound bullish, they also issued 161 TMT of corn import licenses, which takes this season's total to 10.4 MMT, up 79% on 2011/12.

The Russian and Ukraine harvests are now underway, around 10 days earlier than normal. Dow Jones report barley yields in Russia's southern Krasnodor region have averaged 5.28 MT/ha so far, up 28% on the early harvest results of last season. In Stavropol early barley yields were said to be 3.71 MT/ha, up 74% versus last year. Impressive looking results, although it is possible that growers in the region decided to combine the poorer looking crops first last year.

Goldman Sachs issued a very bearish looking report late Thursday night by all accounts, suggesting that US corn prices could fall to USD4.75/bushel and soybean prices to the 2011 lows of USD11.00/bushel. There's even mention of USD4.25/bushel and USD10.00/bushel should the USDA's current forecast for record corn and soybean production in the US this year come true.

The Argentine wheat crop meanwhile is 30% planted, the same as this time a year ago. What's different from 12 months ago though is that the Argentine agriculture minister says that the crop could be "about" 16 MMT this year which would be up almost 78% on last year. That would be around the kind of production that they regularly used to achieve in the last decade of the "noughties" when they were a stalwart figure in the world's top six wheat exporting nations.

Russia's Ag Ministry estimated Russia’s 2013 grain crop at 95.0 MMT, up 32.5% versus 71.7 MMT a year ago

Ukraine's Ag Ministry estimated 2013/14 wheat exports at 8-9 MMT, with corn exports at a record 17.0 MMT and barley exports at 2.0 MMT.

Bulgaria's Ag Ministry said that wheat production there this year would be up 7-9% on 2012 to 4.7-4.8 MMT.

Australia's ABARES yesterday raised their wheat production estimate there this year to 25.4 MMT, up 15% on last year on a combination of a higher planted area and better anticipated yields.

Essentially most of the big exporting nations, with the exception of the US and India, and the majority of the traditionally cheap sellers in the FSU and Eastern Europe are looking at a significant production recovery in 2013. To many of those sellers price is an almost secondary consideration.

The regular weekly crop report from FranceAgriMer shows that all is not ideal with the corn in particular there though. Corn planting only rose from 89% complete a week ago to 92% complete this week (versus 100% a year ago), and good/excellent crop conditions fell two percentage points to 60% versus 71% a year ago. Corn with 6-8 leaves visible is only 35% against 72% this time last year.

French winter wheat headed was at 90% versus 100% last year, good/excellent ratings held steady from a week ago at 68%, but down versus 74% in 2012.

French spring barley is only 23% headed compared with 87% a year ago. They said that 72% of the crop was rated as good/excellent, down one point from last week and compared with 88% a year ago. French winter barley is 67% good/excellent, the same as last week and last year.