EU Grains - A Lively Week But One That Ultimately Ends Little Changed

15/05/15 -- EU grains closed mostly lower on the day and mixed, but little changed, for the week.

The day ended with May 15 London wheat down GBP0.35/tonne at GBP108.10/tonne, Sep 15 Paris wheat was EUR1.50/tonne lower at EUR174.50/tonne, Jun 15 Paris corn was down EUR0.50/tonne at EUR154.50/tonne and Aug 15 Paris rapeseed fell EUR0.75/tonne to EUR353.75/tonne.

It's been quite a lively week, but ultimately one that ends with prices little different to where they were this time last Friday. For the week London wheat was GBP0.15/tonne higher, with Paris wheat gaining EUR1.25/tonne, corn lost EUR0.25/tonne and rapeseed was EUR0.50/tonne lower.

The old crop/new crop London wheat spread widened to GBP11.90/tonne versus GBP11.10/tonne a week ago and GBP8.35/tonne on the first of the month.

The pound finished the week little changed versus the euro, and up around 3 cents against the US dollar.

As was fairly widely anticipated, Russia today abolished the minimum EUR35/tonne export duty on wheat. That might allow a further 1-2 MMT to come onto the export market between now and the end of the season, depending on who's estimate you believe.

The statement that accompanied the announcement said that the move would provide Russian agricultural producers with additional funds to carry out their spring sowing campaign. It's probably more likely though that Russian shippers already have much, if not all, of this wheat on hand already, so Russian growers might not get much in the way of financial benefit from the move.

There are reports now that domestic Russian prices have fallen so low that it is more profitable (or less loss-making) to sell to the government intervention fund than to shippers looking to export.

Russian spring grain planting is said by the Ag Ministry to be 45% complete on 14 million ha, which is 2.2 million ha less than this time a year ago. Progress is slowest in the Far Eastern region (20% sown), Siberia (17% complete) and the Urals (7% done).

Nationally only 25% of the Russian 2015 spring wheat crop has been sown so far. Spring barley and corn planting is around two thirds done.

APK Inform forecast Russia's 2014/15 barley exports at almost 5.5 MMT - a new record and more than double those of last season.

They also raised their estimate for total 2014/15 Ukraine grain exports to 34.8 MMT, a 8.9% rise on last season and a record volume. That includes 19 MMT of corn (down 3.9% on last season), 11 MMT of wheat (up 17.7%) and 4.38 MMT of barley (up 77%).

The Ukraine Ag Ministry said that the country had exported 30.22 MMT of grains so far this season, including 15.4 MMT of corn, 10.21 MMT of wheat and 4.38 MMT of barley.

Essentially then APK Inform seem to believe that barley exports are finished, and that there's less than 800 TMT of wheat to ship between now and the remainder of the season.

The Ukraine state statistics service said that the country's grain stocks as at My 1 were 22% higher than a year ago at 12.9 MMT, including 6.8 MMT of corn, 4.6 MMT of wheat and 1 MMT of barley.

Closer to home, FranceAgriMer said that the French corn crop was now 92% planted as of Monday, up 10 points in a week and 4 points ahead of this time last year.

French winter wheat is 26% headed, up from 7% a week ago but 10 points behind last year. Winter barley is 96% headed versus 70% a week ago and 98% a year ago. They said that 36% of the spring barley crop was at the 2-node stage versus 11% a week ago and 17% this time last year.

They estimate 91% of the French winter wheat crop to be in good to very good condition, up one point on a week ago and versus only 74% a year ago. Winter barley ratings also improved one point to 90% good to very good versus 73% a year ago. Spring barley was rated 95% good to very good and corn was pegged at 91% good to very good.

Bloomberg report that temperatures are seen as much as 3C below normal for the UK, France, Benelux and Germany next week.

The leading French grain hub of Rouen exported less than 70,000 MT of grains in the week through to May 13 - the lowest volume since the holiday shortened last week in December. The volume included 38,000 MT of feed barley to China, 26,000 MT of wheat for Spain and 1,750 MT of wheat destined for the UK.

Defra reported that UK wheat stocks (excluding on farm stocks in Scotland and Northern Ireland) were up 49% year-on-year as at the end of February at 6.4 MMT. Barley stocks were up 21% at 2.2 MMT. Both stock levels were the highest since at least 2008, and the wheat figure means that almost 39% of last year's production is still here unused.

They said that 68% of total UK grain stocks were still being held on farm.