EU Grains Close -Wednesday

06/06/12 -- EU grains finished higher with Jul 12 London wheat ending up GBP0.50/tonne to GBP171.50/tonne, and new crop Nov 12 climbing GBP0.25/tonne to close at GBP155.00/tonne. Aug 12 Paris wheat was unchanged at EUR208.00/tonne, whilst Nov 12 was EUR1.00/tonne firmer at EUR206.50/tonne.

It was a day of mixed influences, but none of them particularly dramatic, in a kind of "is the glass half full, or half empty" sort of a day.

The USDA attaché in Russia estimated that grain production there this season would amount to 88 MMT this year down 6% from last year's 94 MMT. Wheat production will come in at 54 MMT, 2 MMT lower than the official number from Washington last month, although higher than some other estimates in the market, they said.

Exports will however be harder hit, with total grain exports of 19 MMT representing a fall of 30% on this season's 27.1 MMT. Wheat shipments declining by 24% to 16 MMT, they estimate.

Many farmers complained that there was practically no spring this year, as cold winter weather suddenly switched to summer heat and dryness, they commented.

"This sudden onset of very hot temperatures resulted in snow quickly melting and evaporating rather than soaking into the soil to improve moisture levels. In addition, this weather has sped up the development of winter wheat, with heading occurring 2 weeks early in many parts.

"In some areas there was no rain from the first week of April through mid to late May and this significantly impacted the growth of winter wheat. Although rains began to fall at the end of May and this will help in filling of grain, the yield potential is expected to already have been significantly damaged by the previous dryness. These May rains, however, are expected to be beneficial for sown spring crops, including corn and sunflowerseeds," they concluded.

At home, the HGCA said that "the total area planted to cereals and oilseed rape by 1 December 2011 in England and Wales is estimated 5% higher than in December 2010 at 2.984M ha. The England and Wales wheat area planted by 1 December 2011 is estimated 3% higher than the previous December at 1.862M ha."

Private US analytical firm Informa Economics raised their US winter wheat crop production forecast to 1.676 billion bushels, up 1.2% from their May forecast. Wheat development has been notably much faster than normal during May, with crop conditions significantly better than the five year average, they observed.