EU Grains End Choppy Week Mostly Lower

02/10/15 -- EU grains closed mixed but mostly a little lower on the day and for the week.

At the close, Nov 15 London wheat was down GBP1.30/tonne to GBP115.55/tonne, Dec 15 Paris wheat was EUR0.50/tonne easier at EUR175.75/tonne, Nov 15 Paris corn was EUR0.25/tonne higher at EUR162.00/tonne, whilst Nov 15 Paris rapeseed was down EUR0.25/tonne at EUR368.50/tonne.

For the week that puts London wheat GBP0.25/tonne lower, and in Paris wheat was EUR0.75/tonne easier, with corn down EUR3.25/tonne whilst rapeseed lost EUR1.25/tonne.

It's been a fairly choppy week. with the market being pulled this way and that by conflicting news. Talk of dryness for winter plantings in Russia, Ukraine and the US leans mildly supportive, although there's still time for Mother Nature to intervene and correct most of these problems.

EU and US wheat exports continue to struggle in the face of strong competition from the Baltic and Black Sea however. Brussels issued 456.7 TMT worth of soft wheat export licences this past week, a 9% decline on a week previously. France is struggling to maintain it's market share too, they only picked up 21% of this week's licences, down from 33% the previous week. So far this season cumulative soft wheat export licences now total 5.2 MMT, which is 23.5% below where they were this time a year ago.

Earlier this week the EU Commission forecast EU-28 soft wheat exports in 2015/16 to fall a more modest 14%, and the USDA currently only has all wheat exports down to decline by 8% this season. For sure some pick up in export pace can be expected in the second half of the season, as Ukraine and Russia traditionally "front-load" their sales programme, although Russia's exports have been slower than normal due to the floating duty on wheat sales which was only reduced yesterday.

France account for nearly 37% of all soft wheat export licences so far this season (nearly 1.9 MMT worth), with Germany in second with around 19% (just over 1.0 MMT) and Lithuania in third with over 10% (534 TMT), just ahead of Romania with 10% (517 TMT). The UK? A princely 4,050 MT worth of our wheat has been sanctioned for export outside of Europe so far this season.

EU-28 barley sales have been better though, with 135.6 TMT worth of export licences released in the past week, up 19% from the previous week, and with France accounting for 79% of those, up from 43% the previous week. Season to date barley export approvals now stand at 3.4 MMT, up 48% from a year ago. France has 34% of that market, followed by Germany with 21%, the Netherlands with 18% and Romania with nearly 16%. The UK scores a bit better here, with just over 7% (25,420 MT) of barley approved for export outside the EU.

The dryness in Ukraine that's held up winter grain and rapeseed plantings, also seems to be having a detrimental effect on corn yields. They've harvested just over 1 million ha of corn so far, around 24% of the planted area, producing a crop of 4.66 MMT to date with yields averaging only 4.64 MT/ha. Whilst yields are creeping higher as the harvest progresses, consider how much they need to improve to get anywhere near the USDA's forecast of 6.59 MT/ha. Clearly that isn't going to happen.

The Ukraine Ag Ministry now forecast their 2015 corn crop at 22.2 MMT, with total grain production at 58.5 MMT (that was predicted at 60.5 MMT a month ago). The USDA still have Ukraine corn output at a very optimistic 27 MMT this year.

Russia's corn crop however is on track to match the USDA's forecast average yield of 5.0 MT/ha. They're 34% harvested so far, producing a crop of 4.7 MMT to date with yields averaging 5.01 MT/ha.

Russia's 2015 wheat harvest is now said to be entering the home straight at 93.2% complete for a crop of 61.4 MMT so far. Yields are averaging 2.57 MT/ha, say the Ag Ministry. The USDA have these down to cross the finishing line at 2.37 MT/ha.

Russian winter grain plantings are said to be complete on 11.9 million ha, or 69.5% of the planned area. That's 0.5 million ha more than this time last year when dryness was also an issue.

"Weather conditions have become unfavourable in Russia’s winter wheat with intensifying drought late in September. Rainfall has been virtually non-existent the past 2 weeks in the Southern District, Chernozem and Volga. Strong drying was accompanied by unusually hot temperatures, near 80 F, increasing evaporation and further sapping field moisture," say Martell Crop Projections.

"The forecast continues dry this next week. Sharply cooler temperatures are also predicted affecting the northern half of the wheat belt. Southern Russia winter wheat areas would continue warm," they add.

In Ukraine, winter grains plantings (almost entirely wheat) are said to be 50% complete on 3.7 million ha. Winter rapeseed planting has only been completed on 69% (568k ha) of the intended area, and that's up just two percentage points in a week, suggesting that little more is going to get sown now.