EU Grains Lower As Harvest Nears

21/06/16 -- EU grains closed lower across the board, with Jul 16 London wheat down GBP1.10/tonne at GBP106.00/tonne, Sep 16 Paris wheat falling EUR1.75/tonne at EUR162.50/tonne, Aug corn was EUR4.25/tonne lower at EUR175.25/tonne and Aug 16 rapeseed was down EUR7.25/tonne to EUR359.75/tonne.

This was the lowest close for London wheat since Jun 1, and in Paris it was a match for the lowest wheat close since May 19.

A growing belief that the UK will vote to remain in Europe on Thursday is calming a few nerves, seeing sterling stabilise, and bringing back a bit more willingness for investors to take a risk on commodities.

Ever-nearing harvest pressure outweighs concerns over French crop conditions. Sharply weaker US corn prices today were a negative for feed wheat, as well as corn.

A Reuters survey estimated the French soft wheat crop at 37.5-38.5 MMT versus 41 MMT last year, reflecting reduced yields due do pests and disease damage because of persistent wet weather.

On Monday, MARS pegged French yields at 7.32 MT/ha, down 6% versus 7.79 MT/ha a year ago. The French Ministry however estimate plantings this year to be up on 12 months ago and at the highest levels since before World War 2.

That, combined with the old adage that rain makes grain, might temper production losses - meaning that it is quality not quantity that is compromised. I'd plump for a French crop of closer to 39.5 MMT this year.

Germany has seen some of the wetness that has afflicted most of France in southern areas, but has been dry in the north. The German farm cooperative currently estimate overall production down 2.9% at 25.77 MMT.