EU Grains Mixed Amidst Lack Of Fresh News

03/06/15 -- EU grains closed mixed on a no news sort of a day. The session ended with Jul 15 London wheat up GBP0.30/tonne at GBP115.00/tonne, Sep 15 Paris wheat fell EUR0.50/tonne to EUR182.00/tonne, Jun 15 Paris corn was EUR1.25/tonne higher at EUR156.25/tonne whilst Aug 15 Paris rapeseed was down EUR1.00/tonne to close at EUR374.75/tonne.

The EU Commission raised their forecasts for both corn and barley production in the union, but pared back slightly that for soft wheat.

They now predict an EU corn crop of 69.1 MMT this year, up from a previous estimate of 66.3 MMT, although still down 11% on last season's record 77.8 MMT.

For barley they now go 59.5 MMT, up from 58.6 MMT previously, and not too far behind the 60.2 MMT produced last year.

Soft wheat production was trimmed from 141.6 MMT to 141.5 MMT, a near 5% reduction on 148.8 MMT in 2014.

Rapeseed prices consolidated recent steep gains today, even though Oil World cut their forecast for the global crop to 67 MMT, which is somewhat lower than the IGC's recent 67.8 MMT and the 68.1 MMT currently predicted by the USDA. Oil World's figure represents a 2.9% reduction on last year, and re-enforces the notion that world stocks of the oilseed will get much tighter in 2015/16.

Russia picked up 15 TMT of grain in its latest intervention purchase round. The government are paying a little under RUB10,000/tonne for 3rd grade wheat (12.5% milling wheat), the equivalent of around $186/tonne. Intervention prices are said to offer better value than selling to an exporter at the moment, although it's unclear exactly when the government will start buying new crop.

The harvest in southern Russia should begin around 4 weeks from now.

The Russian National Association of Exporters of Agricultural Products are said to be lobbying the government (along with the Russian Grain Union) to make changes to the upcoming tax on wheat exports that kicks in on Jul 1. Because the new duty is based on the price of wheat in roubles, it carries "big unpredictable risks" given the volatility that's been seen with the Russian currency over they past year, they say.

Across the border in Ukraine, their Stats Office reported that agricultural input costs are up 63% compared with a year ago, which will surely have a negative impact on yields in 2015.

Ukraine analysts Ukroliyaprom are forecasting increased oilseed production there this year though, with sunflower output at 10.5 MMT, a rapeseed crop of 2.3 MMT and a soybean crop of 4.4 MMT. The latter looks particularly optimistic, with the USDA currently only at 1.9 MMT, although they are also higher than Washington on sunflower (with the USDA at 10.0 MMT) and rapeseed (1.9 MMT) too.

Experts are now predicting a "moderate to severe" El Nino event this summer, the effects of which already appear to be demonstrating themselves in various areas around the globe.

The Indian Met Office now say that there's a 66% chance of a "deficient" monsoon season there this year, and only a 6% chance of a "normal" one. The latter figure was 28% a month ago. They are predicting 88% of normal rainfall from this year's monsoon, down from the 93% of normal estimated a month ago. The monsoon season is expected to kick off around the end of this week, a few days later than normal.

Australia is another country typically detrimentally affected by El Nino, especially in the eastern states where wheat yields usually fall well below average.

In contrast, a summer El Nino event frequently brings abundant rains and slightly cooler than normal temperatures to the Midwest, typically boosting corn yields to above trend line averages.