EU Grains Mixed, Exports Still Lag And Plantings For 2016 Look Barely Changed

20/11/15 -- EU grains closed narrowly mixed on the day and for the week.

At the close, Nov 15 London wheat was up GBP0.50/tonne at GBP112.35/tonne. In Paris, Dec 15 wheat fell EUR0.25/tonne lower to EUR176.25/tonne, Jan 16 corn was EUR1.25/tonne easier at EUR167.00/tonne and Feb 16 rapeseed gained EUR0.50/tonne to EUR377.00/tonne.

For the week, London wheat fell GBP0.20/tonne, Paris wheat was EUR0.75/tonne lower, corn was a euro higher and rapeseed gained EUR4.50/tonne.

Brussels confirmed that they'd released 636 TMT worth of EU soft wheat export licences this past week, up 58% on 401 TMT a week ago, and the largest weekly volume of the campaign so far.

Even so cumulative season to date licences still lag the pace of a year ago by 30%. Barley export licences were issued for 126 TMT, taking the season to date total to 4.48 MMT, some 24% up compared with 12 month ago.

Corn import licences this week totalled 314 TMT taking the season to date total to 3.9 MMT, up 39% versus 2.8 MMT this time last year.

Reuters report on a rare cargo of French wheat loading at the southern French port of Fos-sur-Mer bound for Lebanon, suggesting that cheap French prices are finally allowing their wheat to make inroads to some more exotic destinations.

Certainly euro weakness looks like continuing to help that cause.

The global balance sheet though continues to paint a picture of plentiful wheat supplies in 2015/16, and a more than ample carryout. Plantings for next year already look like being little changed, despite current low prices.

The IGC yesterday said that incorporating assumptions for spring wheat plantings and the next southern hemisphere crops, the world harvested area in 2016 is projected at 221.8 million ha, down less than 1% year on year.

Earlier in the week, Strategie Grains forecast the EU wheat area to decline just 1% saying that "soft wheat maintains a good acreage...because of the good conditions for wheat sowings, and poor conditions for rapeseed."

In the UK, the HGCA are pencilling in a "static" wheat area, a 4% decline in winter barley and a 10% increase in spring barley sowings.

If we guess that yields in 2016 possibly won't be able to achieve the bumper levels experienced this year, then EU wheat and barley production in 2016 should fall. Any decline however will likely be at least tempered, if not entirely eradicated, by potentially exceptionally large carryover stocks at the end of the current season.

The USDA currently has EU 2015/16 wheat ending stocks at 16.34 MMT, a 22.7% increase versus the end of last season - and that assumes that we can reach their ambitious export target this campaign of a reduction over 2014/15 of less than 7%.

We also need to consider that EU corn production is likely to recover significantly in 2016.

On the international tender front, Tunisia bought 125,000 MT of soft wheat for Dec/Feb shipment, along with 92,000 MT of durum for Feb/Apr and 50,000 MT of feed barley for January. All of optional origin. France should get a look in on supplying the majority of that.

FranceAgriMer said that the French winter wheat crop is now 98% sown, along with 100% of the anticipated winter barley area also now in. The 2015 French corn harvest is said to be 97% complete.

French winter wheat is rated 97% good to very good, up a point on a week ago and 3 points ahead of this time last year. The proportion of the crop rated in the top "very good" category is 36% versus 34% a week ago and 27% this time last year.

The unusually mild November that we've seen so far across much of Europe is finally set to come to an abrupt end this weekend. Generally however crops appear well established and in good shape heading into winter dormancy.