EU Grains Mostly Higher In Reaction to USDA Report
11/11/13 -- EU grains closed mostly higher, in a slightly delayed reaction to Friday night's USDA report which basically wasn't quite as bearish on US corn production this year as was expected by the market. Even so, a record world wheat, corn and soybean crops in 2013/14 could hardly be considered bullish.
The session ended with Nov 13 London wheat up GBP1.75/tonne to GBP165.00/tonne, Nov 13 Paris wheat EUR0.75/tonne firmer at EUR202.25/tonne, Nov 13 Paris corn EUR3.00/tonne steadier at EUR176.50/tonne and Feb 14 Paris rapeseed up EUR3.00/tonne at EUR379.75/tonne.
We now appear to be in a "is the glass half full, or half empty" type situation. As far as wheat is concerned, output in the FSU is seen lower than it was in September whilst amongst more discerning sellers like the US, Canada and the EU it is said to be higher. Ultimately, if it's the stronger sellers that hold the whip hand then you might expect the market to appreciate over the next few months. Some would argue however that how can world wheat consumption in 2013/14 also be a record 703.5 MMT, more than 24 MMT higher than it was last season, given that we also have a record corn crop - more than 100 MMT more than it was in 2012/13?
As ever, it seems that the market's perception of the USDA's numbers is more important than they reality of what they portray.
Other news tells us that the Russian 2013 grain harvest is now more than 93% complete at 92.2 MMT, including 53.7 MMT of wheat (in bunker weight) off 97.2% of the intended area. This time a year ago the harvest had only produced 72.9 MMT of wheat. SovEcon say that domestic wheat prices have risen for the last 5 weeks, to RUB7,825/tonne (USD239.20 or GBP149.60) for 3rd grade milling wheat.
The Russian Ministry say that grain exports for the week to Nov 6 were 507 TMT, including 322 TMT of wheat. That takes 2013/14 grain exports to 11.684 MMT so far this season, a relatively modest rise of 13% year on year.
Ukraine's grain exports are up a similar percentage during 2013/14 at 10.5 MMT. That includes 5.6 MMT of wheat, almost 3 MMT of corn and 1.85 MMT of barley.
APK Inform said that Ukraine's grain exports for the week to Nov 10 were up 46% on the previous week at 982 TMT.
A delve through the minutiae of Friday's USDA report shows that EU-28 wheat production was raised from the 142.9 MMT forecast in September to 143.3 MMT. That included small increases for France (from 38.55 MMT to 38.6 MMT, a 1.82% rise on 2012/13) and Germany (up from 24.7 MMT to 24.87 MMT, a 10.96% rise on last year). Output in the UK and Poland was left unchanged at 12.1 MMT (down 8.75% versus 2012/13) and 9.4 MMT (up 9.2%) respectively. Spain's wheat crop was seen 51% more than a year ago at 7.7 MMT.
The USDA pegged the EU-28 barley crop at 59.29 MMT versus 58.1 MMT in September, and up 8.16% versus 2012/13. The UK crop was increased from the 6.8 MMT forecast two months ago to 7.1 MMT, and 28.58% more than in 2012/13.
They put the EU-28 OSR crop at 20.8 MMT, up 100 TMT on their September forecast (and up 8.28% versus a year ago). The UK crop was increased by that 100 TMT to 2.1 MMT, although that's still down 18% on 2012/13.
The Russian Ministry said that winter grain plantings for the 2014 harvest were complete on 14.3 million hectares versus 15.6 million this time a year ago.
French customs data shows that they exported 1.57 MMT of grains in September, up 48% from a year previously. Algeria was the top buyer, taking 539 TMT.