EU Grains Treading Water

17/10/13 -- EU grains closed mixed once more, with Nov 13 London wheat settling GBP0.25/tonne lower at GBP162.95/tonne, whilst Jan 14 was GBP0.15/tonne firmer at GBP164.60/tonne. Nov 13 Paris milling wheat settled up EUR1.25/tonne to close at EUR199.50/tonne. Nov 13 Paris rapeseed was down EUR1.00/tonne at EUR376.50/tonne.

Defra said that UK wheat plantings fell 18% for the 2013 harvest to 1.6 million ha. Despite yields rising 12% that still puts production 8.7% lower at 12.1 MMT. They said that the UK winter barley area was 19% lower, but spring barley plantings rose 46%. With yields up 6.2% , overall UK barley production was 29% higher this year at 7.1 MMT, they added. The overall OSR area was down 5.2% to 716k ha, with yield also falling 11% overall output was 16% lower at 2.1 MMT.

The UK oat crop was probably a 40-year high at 850 TMT to 1 MMT, Bloomberg reported yesterday. Output in 2012 was 627 TMT and UK milling demand is only 500 TMT meaning that the domestic market is "subdued" at best.

MDA CropCast raised their forecast for the Canadian wheat crop by 1.5 MMT from last week to 32.8 MMT, some 1.3 MMT higher than the USDA's September estimate and 20.6% up on last year. They cut their Argentine wheat crop forecast by 0.7 MMT however to 10.9 MMT, although that's still nearly 8% more than a year ago.

The Russian grain harvest is 87.6% done at 85.4 MMT. Wheat accounts for 51.8 MMT of that off 91.8% of the planned area. Winter grain plantings are improving significantly, at 11.6 million hectares that's up 2.4 million ha in a week, and now stands at over 71% of the original Ministry target. The Central Black Earth region is now finished, although that's around a month past the ideal planting window my sources tell me.

Ukraine's Ag Minister says that they will harvest a grain crop of "about" 60 MMT this year (a record). So far they've harvested over 46 MMT of grains off 82% of the planned area, including 23 MMT of wheat, he adds. He now indicates that there will be only 500,000 hectares of winter grains which will not get planted, far less than the previous estimate of 1.5 million.

Russian and Ukraine weather looks conducive to advancing the late wheat and corn harvest and also aiding winter plantings in the week ahead.

India said that it will raise the local procurement price for wheat in 2014 to 1,400 rupees/100 kg, which is around USD228/tonne to boost domestic plantings. This is despite the fact that they are still awash with a government surplus from the 2013 harvest and are in the midst of having to drop their sale price aspirations to below the cost of purchasing in 2013 (when storage and other costs are added) to generate exports. There are elections coming up you may not be surprised to hear.

It remains to be seen whether the temporary "kicking the can a little further down the road" so-called "resolution" to the US debt problem will encourage spec money back into the market in the short-term. It also is unclear as to what reports the USDA will now issue and when. A return to volatility can be expected in the days/weeks ahead.

The EU Commission said today that it is to drop it's anti-subsidy probe into "anti-dumping" imports of biodiesel from Argentina and Indonesia, which could be bearish for EU OSR demand going forward.