EU Grains Grind Mostly Lower, UK Crops Revised Higher

17/12/15 -- EU grains traded mostly lower, despite a stronger US dollar following the first US interest rate rise in almost 9 years last night.

At the finish, Jan 16 London wheat was down GBP0.75/tonne at GBP110.75/tonne, Mar 16 Paris wheat was unchanged at EUR175.00/tonne, Jan 16 Paris corn was down EUR0.75/tonne lower at EUR158.75/tonne, whilst Feb 16 Paris rapeseed was flat at EUR367.75/tonne.

Defra released their final UK 2015 crop production estimates today, pegging the wheat crop here at 16.4 MMT, up from the 16.13 MMT predicted a couple of months ago, although marginally below output of 16.45 MMT in 2014.

"While the wheat area was down by 5% year-on-year, production has only shown a decline of 1%, with record yields the driving force behind the second consecutive +16 MMT crop," said the HGCA.

"Final yields have been reported at 9.0 MT/ha, the highest on record, with the UK average yield enhanced by increases in all but one region (East England), compared with 2014," they added.

The size of the 2015 UK barley crop was revised 94 TMT higher than that forecast in October to 7.38 MMT, and the UK OSR harvest was pegged 221 TMT higher than previously taking 2015 production to 2.54 MMT.

"Today’s report suggests further bearish sentiments in an already price-pressured market; the impact of the final statistics will be incorporated in the updated UK cereals balance sheets in the New Year," the HGCA noted.

Strategie Grains meanwhile increased their forecast for EU-28 soft wheat exports this season by 800,000 MT from previously to 27.6 MMT. That's a 15% decline year-on-year versus sales of 32.5 MMT in 2014/15. With exports currently down 22% versus 12 months ago, these are clearly expected to pick up a little as we enter the second half of the season.

There's nothing particularly unusual there, EU exports would normally increase later in the campaign once the bulk of the glut of cheap Black Sea shipments are out of the way. The outlook for a weaker euro in 2016 should also provide further assistance.

Looking ahead to production prospects for 2016, Strategie Grains put the EU-28 soft wheat crop at 143.6 MMT, a 6.4 MMT decline compared to this year and the first annual drop in output since 2012.

This is largely down to an anticipated return to "normal" yields of 6.0 MT/ha versus this year's bumper 6.2 MT/ha result, as plantings are seen little changed compared with 12 months ago at 24 million ha.

Still, EU-28 soft wheat carryover stocks at the end of 205/16 at a still "very substantial" 18.4 MMT.