EU Grains Rise, Production Estimates Vary Widely

28/07/16 -- EU wheat closed mostly firmer as more crop downgrades continue to come in for France and European wheat.

At the close Nov 16 London wheat was up GBP1.25/tonne at GBP125.00/tonne, Sep 16 Paris wheat was up EUR2.00/tonne to EUR165.75/tonne, Aug Paris corn was up EUR0.25/tonne at EUR170.005/tonne and Aug 16 Paris rapeseed was EUR3.25/tonne higher at EUR361.25/tonne.

ODA released an EU-28 soft wheat production estimate of 134.0 MMT, down 17 MMT (or 11%) on last year. They said that the French crop may only muster 30.4 MMT, with the potential to further deteriorate to just 29.4 MMT as the harvest moves north.

The USDA's attache in Europe is predictably less concerned, predicting an EU-28 all wheat crop of 154.5 MMT, down 4% from last year's 160 MMT (durum wheat production in Europe is typically around 8-9 MMT in any given year).

They did however warn that production could be lowered again as the harvest progresses. They see 2016/17 exports at 4-year low of 30.5 MMT, down 9% compared to 2015/16.

Rabobank came in a bit lower in production than the USDA at 154.0 MMT.

Production and export estimates for Russia continue to rise to new record levels as they look well placed to take advantage of Europe's misfortune this season.

IKAR raised their forecast for the 2016 Russian grain crop by 2 MMT to 114 MMT (2015: 104.8 MMT), with wheat output up 1 MMT to a record 69 MMT and exports at a record 29 MMT (2015/16: 24.5 MMT).

Rabobank have the Russian wheat crop at 65.6 MMT and 2015/16 grain exports at 27.1 MMT.

They also see this year's Australian wheat crop at an impressive 26.7 MMT (USDA: 25.5 MMT).

Egypt tendered for wheat for Sep 1-10 shipment, booking one cargo each of Romanian and Russian wheat. French wheat wasn't offered. Rumour suggests that France may even have bought a cargo of Romanian wheat themselves to bolster concerns over new crop quality.