EU Grains: Well, It Could Have Been Worse

24/08/15 -- EU grains managed to stage something of a recovery from early Black Monday blues, helped by Chicago wheat and corn moving into the green in afternoon trade once the US market awoke and wiped the sleep from it's eyes.

Rapeseed remained well into the red, even if it was also well off session lows, under the influence of soybeans trading at prices not seen in years. They it would seem stand to lose the most from China catching a cold, they do after all account for two thirds of all global soybean trade.

At the close, Nov 15 London wheat was up GBP0.55/tonne to GBP115.30/tonne, Sep 15 Paris wheat was EUR3.25/tonne easier at EUR163.50/tonne, Nov 15 Paris corn was down EUR2.25/tonne to EUR172.00/tonne, whilst Nov 15 Paris rapeseed had slumped EUR8.75/tonne lower to EUR348.75/tonne. At one stage the front month rapeseed contract hit as low as EUR339.50/tonne to stand EUR18.00/tonne lower on the day.

London wheat came off the best due to the suddenly sharply firmer euro, against which the pound finished the day at 1.36, it's lowest since Jun 8.

Euro strength was tied to ideas that the Fed and BoE will now be delaying plans to start raising US and UK interest rates any time soon, faced with the Chinese-led global economic malaise. When China sneezes the rest of the world does indeed catch a cold it would seem.

The EU Commission's MARS unit released their August report, in which they said "Large areas of Europe have been negatively impacted by high temperatures and dry conditions, hitting summer crops during their most critical grain-filling stage."

They subsequently cut their forecast for EU-28 corn yields this year from the 6.71 MT/ha estimated a month ago to an average 6.40 MT/ha. That's 20% down on a year ago and almost 9% below the recent 5-year average.

Wheat yields were raised from 5.80 MT/ha to 5.81 MT/ha, which is 2.5% above the 5-year average. They've also increased winter barley yields to an average 5.61 MT/ha, which is 4.7% above the 5-year average. OSR yields were raised to 3.25 MT/ha, which is 3.8% above the 5-year average.

In the UK, they estimated average wheat yields at 8.09 MT/ha, up slightly on 8.07 MT/ha a month ago, although lower than the HGCA's current figure of 8.3-8.6 MT/ha. "First reports suggest good yields and quality, despite the fact that frequent rains hampered the harvest in Ireland and the northern UK," they said.

Average UK barley yields were trimmed from 6.09 MT/ha a month ago to 6.05 MT/ha, which is well below the HGCA's current figures. OSR yields here in the UK were estimated at 3.73 MT/ha, unchanged on a month ago and in line with current HGCA thinking.

FranceAgriMer said that 12% of this year's French wheat crop had protein levels of over 11.5%, a further 34% of the crop had proteins of between 11-11.5%, and another 40% was in the 10.5-11.0% region.

They said that 40% of the crop had a bushel weight of over 80kg/hl, with 91% of the crop over 78kg/hl, and that 96% had hagberg levels of over 240. That's a better and more consistent quality than last year.

The Russian Ag Ministry said that the 2015 harvest there was now halfway through, producing a total grain crop of 65 MMT to date. That includes 45.7 MMT of wheat and 12.7 MMT of barley. They estimate final grain production this year at 102.9 MMT, including 59.8 MMT of wheat, 17.4 MMT of barley and 13 MMT of corn.

Winter plantings for the 2016 harvest in Russia are already said to be 7.3% complete.

Russia's 2015/16 total grain exports (to Aug 19) were 3.8 MMT, according to Ministry data. That's 35% down compared to the same period a year ago. Exporters will be hoping that they can convince the government to raise the current export duty ceiling on wheat from the RUB11,000/tonne level at which it currently kicks in given recent rouble weakness.