EU Grains Mostly Higher On Strong Export Demand, Despite Australian Crop Upgrade

03/12/13 -- EU grains closed mostly a little firmer, on ideas that the strong pace of EU wheat exports that has been witnessed so far in 2013/14 will continue - if not accelerate.

Jan 14 London wheat ended unchanged at GBP164.25/tonne, Jan 14 Paris wheat finished EUR1.50/tonne firmer at EUR211.50/tonne, Jan 14 Paris corn closed EUR2.75/tonne higher at EUR181.50/tonne, whilst Feb 14 Paris rapeseed was flat at EUR377.50/tonne.

Algeria is seeking 50,000 MT of optional origin milling wheat for Jan shipment, whilst Tunisia is tendering for 109,000 MT of optional origin milling wheat and 75,000 MT of optional origin barley for Jan/Feb shipment. French wheat is likely to be the favoured origin. Egypt are also back in the market for wheat, with Romania, France and Germany all in with a shout.

The EU Commission yesterday pegged the 2013 soft wheat crop here at 134.2 MMT, the highest since 2008. The corn crop was estimated at 65.1 MMT (down from 65.9 MMT previously, but up 10.5% on last year) and the barley crop at 59.0 MMT.

Corn production in western parts of Europe is seen lower. Analysts think that the French corn crop may now only amount to 14.5 MMT versus 15.0 MMT last year, with the German crop seen down from 5.5 MMT in 2012 to more like 4.7 MMT in 2013. Italy's corn crop is forecast also to decline by around 15% to 6.7 MMT. All of these reductions are due to wet weather, either at harvest time (as in the case of France), or in the spring. A larger proportion of the French crop is also seen being downgraded as suitable only for silage/whole crop usage.

In contrast, corn crops in Eastern Europe are at abundant levels. The Hungarian crop is seen 45% higher at 6.8 MMT, with Romania's output up 79% at 9.75 MMT and Bulgaria's forecast up 47% at 2.5 MMT. Ukraine is also expected to have a record crop of around 29 MMT, up almost 29^%, this year. All of these nations are aggressively exporting corn at cheap prices.

ADAS said that almost 95% of the intended UK wheat acreage was planted by the end of November, along with 96% of oats and all of the winter barley and OSR.

For winter wheat "good weather and soil conditions, and memories of autumn 2012, prompted an increase in early drilling this year, with the earliest crops drilled in early September. The settled weather allowed rapid progress until mid-October when rainfall caused some disruption with later sowings," they added.

The Ukraine Farmers Association estimated the country's November grain exports at a record high of 4.2 MMT versus 3.4 MMT in October. That total included a record 3.4 MMT of corn, as they really step up their efforts to export the latter. Russia remains also an aggressive exporter of corn.

The Ukraine Ministry forecast spring 2014 grain plantings up 300k ha versus this year at 8.7 million hectares. Much of that is expected to go into corn and soybeans.

The Russian government bought 25,245 MT of grains for intervention today, that brings the total purchased so far in 2013/14 to 424 TMT.

Their grain harvest is now 95% done at 95.3 MT, including 54.1 MMT of wheat, 16.3 MMT of barley and 10.3 MMT of corn. The Ag Ministry said that they expect 2013/14 grain exports to reach 20 MMT, of which around 14 MMT will be wheat.

Australia's ABARES forecast the wheat crop there at 26.2 MMT, up 16.4% on last year, and up from their previous estimate of 24.5 MMT. They put the barley crop at 8.6 MMT, up a similar percentage on last year, with canola production seen down 15% at 3.4 MMT.