EU Grains Fall As Market Looks Tired

07/05/14 -- EU grains finished the day lower, with May 14 London wheat closing down GBP1.40/tonne at GBP166.00/tonne, and with new crop Nov 14 London wheat GBP1.05/tonne weaker at GBP157.75/tonne. May 14 Paris wheat closed EUR4.50/tonne lower at EUR211.0/tonne, Jun 14 Paris corn was down EUR1.25/tonne at EUR184.50/tonne, whilst Aug 14 Paris rapeseed fell EUR2.75/tonne to EUR353.00/tonne.

The market looks tired up here, although fund money continues to appear to display a renewed appetite for owning grains in favour of equities. The Ukraine crisis is far from over, although the authorities there are at pains to say that the fighting in Odessa has not thus far disrupted activities at the city's port facilities.

The planting of early spring grains in Ukraine is already complete, and corn has been sown on 3.44 million hectares, which is 67% of the anticipated area. That's only a bit less than this time a year ago, when the country went on to produce a record crop.

Spring plantings are also well advanced in Russia, where 10.2 million hectares (or 31.8% of plan) of the spring grain crops are in the ground, 1.1 million ha more than this time last year. That includes 1.6 million ha of wheat, 4.8 million ha of barley and 1.5 million ha of corn. Russian growers have also planted 2.4 million ha of sunflowers, over 460k ha of soybeans and over 300k ha of spring oilseed rape.

UkrAgroConsult said that they expect Ukraine to produce 19.6 MMT of wheat, 24 MMT of corn and 7.2 MMT of barley this year. That represents falls of 6.7%, 11% and 2.7% respectively versus last year. They see Ukraine's wheat exports at 8.6 MMT in 2014/15, with those of corn at 16.7 MMT and those of barley at 2.3 MMT. That's a decline of 4.4%, 12% and 4.2% respectively.

The same analyst now forecasts the Russian wheat crop up 4.6% to 54.5 MMT, with their barley crop rising 10.4% to 17 MMT. Corn production will decline 5.2% to 11 MMT, however. UkrAgroConsult estimate Russia's 2014/15 wheat exports rising 10% to 19.7 MMT, with those for barley up 37.5% to 3.3 MMT, whilst corn exports fall 5% to 3.8 MMT.

If we add both sets of production figures together then we have a combined 2014 Russo/Ukraine wheat crop of 74.1 MMT, up 1 MMT on a year ago. Barley output is seen at 24.2 MMT, up 1.4 MMT versus 2013, and corn production is at 35 MMT, a 3.6 MMT decline. Not a huge amount of overall difference, and certainly not one that justifies recent price gains. Spec money won't let that worry them just now though.

The Spanish Ministry said that their 2014 wheat crop (excluding durum) will fall from 6.7 MMT last year to 6 MMT this time round. Durum production remains flat at 907 TMT, and barley output will decline from 10.1 MMT to 8.5 MMT. Dryness and disease are issues in Spain at the moment.

The USDA's FAS in Egypt estimated that the country will import 10.3 MMT of wheat in 2014/15, a 0.3 MMT rise on this season. The public sector will import just over half that volume (5.7 MMT), they say. Carryover stocks from 2013/14 into the new season will total 4.17 MMT, they add.

A report on Dow Jones says that Indian corn is around $10-15/tonne cheaper into SE Asian homes than Brazilian or Argentine origin corn, and that they therefore expect to export around 600 TMT over the next few months to buyers in the region.

Iraq are tendering to 50,000 MT of US, Canadian, Australian, Ukraine or Russian wheat.