EU Grains Attempt To Consolidate Amidst Harvest Pressure

19/06/14 -- EU grains closed mixed with Jul 14 London wheat up GBP0.10/tonne at GBP139.65/tonne, and with new crop Nov 14 GBP0.55/tonne higher at GBP138.25tonne. Nov 14 Paris wheat fell EUR0.25/tonne to EUR188.25/tonne, Aug 14 Paris corn was down EUR0.50/tonne to EUR176.00/tonne and Aug 14 Paris rapeseed finished EUR4.00/tonne higher at EUR351.50/tonne.

The market appears to be continuing to attempt to consolidate from recent heavy losses.

If these modest gains can be sustained is a good question. At least, as far as London wheat is concerned, the the pound reaching a new 5-year high against the US dollar would suggest that this could be a tall order. Sterling has only been above today's 1.70 level against the greenback only very briefly once since October 2008.

Strategie Grains increased their forecast for the EU-28 soft wheat crop by 2 MMT from last month to 139.4 MMT, a 3% rise on last year, and the second largest ever. They said that crop conditions are largely very good, except for in the case of Spain and Croatia, echoing yesterday's comments from the EU Commission's MARS.

The 2014 winter barley harvest is already underway in Spain, Italy, Greece, Bulgaria and the south of France, they said. Even so, they cut their forecast for EU-28 barley production by 0.5 MMT from last month to 55.5 MMT, a 7% reduction on last year.

The French analysts left their assessment of the 2014 EU-28 corn crop unchanged at 65.9 MMT, a 2% rise on a year ago.

MDA CropCast raised their forecast for the production of wheat, barley, corn and sunflower in both Ukraine and Russia from last week due to improved weather conditions.

The Russian Ag Ministry estimated the 2014 grain crop there at 97 MMT versus 92.4 MMT a year ago. Of that, 53 MMT will comprise of wheat, and grain exports will amount to 22 MMT, up 16% on 19 MMT in 2013/14, they added.

RusAgroTrans said that Russia would export 7-800 TMT of grains in June, the last month of the 2013/14 marketing year. That's down from 1.6 MMT in May, but up on their previous June forecast.

The new FSU/Eastern European harvest continues to undermine price prospects to the upside.

The UAE bought 120,000 MT of milling wheat from the Black Sea region for Sept–Dec shipment. Saudi Arabia is looking for 715,000 MT of optional origin wheat for Sept-Nov shipment.

Brussels cleared 348 TMT of soft wheat for export, bringing the almost over 2013/14 seasonal total to a record 27.5 MMT. They also granted 120 TMT worth of corn import licences, taking the marketing year cumulative total to 14 MMT.

UK growers would love to think that "this is as bad as it gets" - harvest pressure and sterling strength might suggest otherwise, at least for the next few months. However the notion that "all the bad news is already factored into the market" is not without substantiation.