EU Grains End Mixed With Something For Both Bulls And Bears

13/10/15 -- EU grains closed mixed, but mostly a touch higher. London wheat got a bit of support from a sharply weaker pound following the news that UK inflation fell to -0.1% last month, putting off ideas of an interest rate rise here any time soon.

At the close, Nov 15 London wheat was up GBP0.50/tonne at GBP117.00/tonne. In Paris, Dec 15 wheat was up EUR0.25/tonne at EUR180.00/tonne, Nov 15 corn was down EUR1.25/tonne to EUR164.50/tonne and Nov 15 rapeseed was EUR1.75/tonne higher at EUR380.75/tonne for a new highest close on a front month in nine weeks.

Fresh news was relatively scarce. The bulls continue to point to dryness issues for winter wheat in the FSU, along with similar potential problems in the US. The full implication of these problems won't be know for some considerable time however. Australian dryness keeps getting a mention too, the upshot of that will at least be known in a shorter time frame.

The bears point out that the world has now produced a record wheat crop for 3 years in a row, and that 2015/16 ending stocks are forecast at all time highs too. Demand is fairly good at these levels (Egypt, Indonesia, Saudi Arabia and Algeria have all been active buyers in the past couple of weeks), but buyers are picky (Egypt snubbed French wheat for the sake of 3 cents over the weekend) and competition for the business is fierce.

There isn't going to be the same volume of corn around in Europe and the Black Sea this year though. UkrAgroConsult today estimated the 2015 Black Sea corn crop at 47.0 MMT, down 9% from 2014 due to hot and dry weather.

Ukraine's crop appears to have been particularly badly affected. They estimate that at 23 MMT, down 11% on last year and 2 MMT below the current USDA forecast. Agritel have the crop a fraction lower than that at 22.98 MMT.

UkrAgroConsult have the Romanian corn crop estimated at 9.0 MMT versus 11.4 MMT in 2014, and the Bulgarian corn crop at 2.5 MMT versus 3.14 MMT last year.

Meanwhile on Friday the French Farm Ministry estimated this year's corn crop in Europe's largest producing nation at only 13.1 MMT, down from 13.5 MMT previously and almost 28% below last year.

Elsewhere, Russia said that their 2015 grain harvest was past 95% complete at 101 MMT in bunker weight. Wheat accounts for 63.3 MMT of that total off more than 98% of the planned area, and barley a further 18.1 MMT off a similar percentage of plantings.

The Russian corn harvest is now said to be just past halfway done producing a crop of 6.9 MMT so far.

SovEcon estimated Russia's total grain crop at 101.0 MMT in clean weight, of which 60.8 MMT is wheat, 17.4 MMT is barley and 12.1 MMT is corn. They see Russia's total exportable grain surplus at 30.0 MMT versus a previous estimate of 31.0 MMT.

The Russian Ag Ministry say that winter grains have now been planted on 14.8 million ha, or 86.4% of the forecast area. A year ago plantings were complete on 15.2 million ha at this time. It's currently cold and dry, and although the weather forecast is a bit more favourable from the weekend onwards, it's not as good as it was yesterday.

At home, milling wheat premiums have returned to "average" levels, say the HGCA. Their latest survey results show "much better quality for both bread milling and biscuit wheat in the UK this season compared with last year."

"Quality results in many EU countries have also improved from last season. Although French and German milling wheat supplies look to be near average, Strategie Grains estimate that the total 2015/16 EU milling wheat harvest, at 105.5 MMT, could be the largest since at least 2007," they add.