EU Grains Slightly Firmer But Range Bound

19/09/13 -- EU grains closed mostly a tad firmer, although still firmly stuck in range bound trade. Nov 13 London wheat settled GBP0.65/tonne firmer at EUR151.85/tonne and Jan 14 was up GBP0.50/tonne at GBP154.65/tonne. Nov 13 Paris milling wheat rose EUR0.75/tonne to EUR185.75/tonne whilst Nov 13 Paris rapeseed settled EUR0.25/tonne lower at EUR368.75tonne.

The dollar was weak in early trade following last night's surprise announcement that the US Federal Reserve were not about to start weaning the patient off the methadone just yet. The pound rose above 1.6150 against the dollar this morning, but had given up a fair chunk of those gains by the time the grain markets were drawing to a close.

A wetter week this past 7 days means that the UK winter wheat harvest still hasn't quite been put to bed yet, with ADAS today reporting that 4% of the crop is still in the field, along with 10% of the national spring barley crop and 60% of spring OSR.

Those that have harvested everything will probably be glad of a bit of rain before the advertised "Indian Summer" comes along next week. I don't think I'll get the sun cream out just yet though.

They certainly aren't "singing in the rain" in the FSU though, where they'd rather like to get the corn crop in and crack on with some winter planting before the winter sets in. The Russian grain harvest is now 69.5% complete at 71.9 MMT. That's only advanced 5.4% in the past week. Wheat accounts for 45 MMT of the total off 70.6% of the planned area. They've only managed to harvest around 10% each of the corn and sunflower crop so far.

They'd rather fancy a break from too much rainfall in Ukraine and Kazakhstan too, although there isn't much sign of one in the 15 day forecast. Could this be the first sign of a weather problem for production prospects for 2014?

Canadian crops are getting bigger. MDA CropCast raised their Canadian wheat production forecast by 1.1 MMT from last week to 31.2 MMT on improved yield expectations. Ag Canada estimated their wheat crop at 30.7 MMT versus previous estimate of 29.2 MMT and compared to the 2012/13 crop of 27.2 MMT.

Ag Canada said that they are seeing higher average yields due to extremely good growing conditions. They also raised their production forecasts for rapeseed, barley and corn.

At 55% done, more than half of Saskatchewan’s crop is in the bin versus 44% normally at this time, according to the weekly provincial crop report.

Australia's crop is also growing, in every sense. CBH, who typically handle around 90% of Western Australia's grain crop, raised their estimate for the volume that they are likely to process in 2013/14 from 9-10 MMT to 11.5-12.6 MMT as recent weather conditions have improved prospects considerably. Very good rains have also fallen this week in the eastern growing states of NSW and Victoria too. South Australia state Ag Dept have also recently raised their forecast for grain production this year.

There's unconfirmed talk that Brazil has bought Polish wheat this week, along with a Canadian cargo or two.

The provisional results of this year's HGCA cereal quality survey say what we already probably knew, that "this year, the domestic crop quality should be enough to meet all but the highest specifications; although import levels will be subject to the speed at which sourcing strategies can be changed." It should be noted that these results only include samples received up to the end of August, so the results could be skewed towards the South East and Group 1 and 2 varieties.

Although there were some wide extremes, the average specific weight for domestic wheat in the survey came in at 77.8 kh/hl versus only 69.6 kg/hl last year and the also above the averages of 2009 and 2010 too. "The improved specific weight implies that more flour will be extracted from a given amount of wheat compared to last year. Thus potentially leading to reduced demand from millers, assuming flour demand remains static," they suggested. Average hagberg falling numbers were the best in recent years (and by some distance) at 334, and proteins are also very good at 12.4%. Average moisture readings this year were 14.8%.

Late news just in is that Brussels issued 547 TMT of soft wheat export licences this past week. That's down versus 715 TMT a week ago, but still a very decent effort.