EU Grains Mostly Lower Following Bearish USDA Report

01/10/13 -- EU grains closed mostly lower in reaction to last night's generally bearish USDA stocks and wheat production data.

Nov 13 London wheat settled GBP1.85/tonne easier at GBP154.90/tonne, whilst Jan 14 was GBP1.80/tonne lower at GBP157.00/tonne. Nov 13 Paris milling wheat fell EUR3.00/tonne to close at EUR190.25/tonne. Nov 13 Paris rapeseed was also down EUR3.00/tonne at EUR360.75/tonne.

The USDA indicated much higher US corn and soybean stocks as at Sep 1 than the market expected, along with higher than anticipated US wheat production in 2013. That was enough to get the European market on the defensive after a week of steady gains.

Concerns over Russian and Ukraine late grain harvests and winter plantings for 2014 remain though. Russia has now harvested 76.6% of it's 2013 grain crop, producing 77.5 MMT to date. That includes 79.2% of this year's wheat crop (48.1 MMT) and 82.4% of the 2013 barley crop (14.8 MMT). The USDA agricultural attaché in Moscow cut his forecast for the 2013 grain harvest by 1 MMT to 90 MMT, due to a similar sized reduction for the barley crop which is now estimated at 16 MMT.

The attaché said that 2013/14 Russian grain exports will total 22 MMT, including 16 MMT of wheat, 3 MMT of barley and 2 MMT of corn.

The Russian Ministry said that winter grains have been planted on 7.8 million hectares, only 47.7% of plan, versus 12.2 million this time last year and 11.5 million in 2011.

The head of the Ukraine Hydrometeorological Centre said that 30% of the winter crop area may have difficulties making it through to spring due to adverse weather conditions.

Some forecasters suggest that drier weather lies ahead for Russia and Ukraine. Others disagree.

The Kazakh harvest is faring better than that in Russia and Ukraine, although at 84.6% complete it still lags last year's 97.5% significantly. They've now harvested 17.163 MMT of grains so far versus a Ministry forecast for a crop of 18 MMT in clean weight, up more than 40% on last year.

In contrast to the FSU, planting conditions at home are excellent. ADAS say that winter wheat is already 30-40% planted, with winter OSR all but finished up and winter barley around 20% done.

For winter wheat: "The earliest crops were drilled from about 10 September, and are just starting to emerge. Rainfall mid-month was welcome to improve the quality of the seed beds, but, with warm breezy days, soils rapidly dried out, making moisture conservation an important aspect of drilling preparations. Many farmers have used left over seed from 2012 following germination tests," they said.

The pound rose to its best levels against the US dollar of the year so far, following news that the Senate had voted down a House of Representatives-passed bill that called for a one-year delay in implementing President Barack Obama's flagship Affordable Care Act. Sterling also reached its best against the euro since mid-January. Both put London wheat under pressure.

Oil World estimated the EU-28 OSR crop at 20.9 MMT, up 6.6% on last year. They see imports falling from 3.4 MMT to 2.9 MMT, with the domestic crush also reduced from 22.6 MMT to 22.1 MMT.