EU Grains Lower On The Week As Thoughts Turn To New Crop

27/03/15 -- EU grains closed mixed on the day, but lower across the board for the week, as thoughts turn to new crop.

At the finish, May 15 London wheat was GBP2.10/tonne easier at GBP121.55/tonne, May 15 Paris wheat was up EUR0.25/tonne at EUR188.75/tonne, Jun 15 Paris corn rose EUR0.50/tonne to EUR162.50/tonne and May 15 Paris rapeseed fell EUR3.75/tonne to EUR363.75/tonne.

For the week, that puts London wheat down GBP1.85/tonne (-1.5%), with Paris wheat falling EUR8.00/tonne (-4%), corn dropping EUR1.25/tonne (-0.8%) and rapeseed losing EUR7.50/tonne (-2%).

It's interesting to see Paris wheat as the biggest loser there, considering the strong export demand for that grade of wheat.

Brussels confirmed last night that they'd issued a further 721 TMT of soft wheat export licences, taking the season to date total to 24.4 MMT, up 7.5% on this time last year.

Algeria were said to have bought 450 TMT of optional origin wheat in a tender, which is widely believed to most likely be French material.

The HGCA meanwhile raised their forecast for the UK's 2014/15 exportable wheat surplus by more than 400 TMT to 3.87 MMT, a more than threefold increase on a year ago. Carryover into next season looks certain to be very high, given that the UK had only exported a little over 1 MMT of wheat by the end of January (the most recent figures available).

It's the GBP8.75/tonne premium on offer between old crop May 15 and new crop Nov 15 that's providing the incentive to carry UK wheat, even if that is down a little on a week ago when the differential was GBP9.60/tonne. You'd probably have to expect that trend to now continue to narrow.

Coceral forecast the 2015 UK wheat crop to fall 12.8% to 14.4 MMT. They've got plantings at 1.892 million ha, which is probably about right, and towards the middle of the HGCA's suggested 1.8 million and Origin's 1.95 million.

UK yields will fall to 7.61 MT/ha this year, down 11% from last year, they estimate.

They see the UK barley crop down 8.6% to 6.4 MMT and the domestic OSR crop to fall 11% to 2.23 MMT.

Production of wheat, barley, corn and OSR is seen lower in many other of the major EU countries too, with the exception of France (soft wheat +1.6% and barley +4.5%), Spain (soft wheat +3.8%) and Denmark (wheat unchanged from a year ago).

Germany's soft wheat crop will fall 8.9%, with barley production down 9.7% and OSR output dipping 15.3% this year, they say. Poland will see it's soft wheat crop fall 8.6%, whilst barley production will be down 3.1% and that of OSR declining by 10.1%.

Meanwhile the Czech Republic will see double digit percentage losses on all three of those crops, whilst Romania's soft wheat, corn and OSR crops will all fall between 10-15%, and Hungary's soft wheat and corn output will post declines of 15-18%.

French crop conditions for winter wheat were estimated at 90% good to very good by FranceAgriMer, down a point on a week ago, but up 14 points compared to this time last year. Winter barley was also rated 90% good to very good, unchanged on a week ago and 17 points up on last year.

Whilst French crop conditions are therefore significantly ahead of a year ago, crop maturity is not. FranceAgriMer say that only 48% of winter wheat is currently displaying an ear of at least 1cm in length, which is 20 points below this time last year. Winter barley at the same stage is 46% versus 67% a year ago.

The HGCA said that spring barley planting in the UK is about 40% done, and that spring oats and wheat are about 50% sown. Spring OSR planting is only just getting going at 3% complete.

Winter crop conditions in the UK are generally pretty good, and crop growth is "fairly normal", they added.