Nogger's Blog

24/08/12 -- EU grains ended mixed, but mostly lower, with Nov 12 London wheat down GBP2.70/tonne to close at GBP203.70/tonne and with Nov 12 Paris wheat EUR3.75/tonne easier at EUR260.25/tonne.

For the week Nov 12 London wheat still added GBP3.45/tonne, although its Paris counterpart shed EUR2.50/tonne. That reflects UK wheat production estimates declining, whist those across the Channel are rising.

European jitters are starting to resurface, keeping traders nervous. The Greek Prime Minister met with German Chancellor Angela Merkel in Berlin today, apparently asking for more time than previously agreed to comply with economic reforms. He's due to fly into Paris tomorrow to plead his case further to French President Hollande.

Meanwhile there's continued talk that the Spanish government may be the next to formally ask the Eurozone for aid. Its ailing banking sector got a handout earlier in the summer, but the government themselves have thus far managed to dodge the bullets.

After the meteoric rise in wheat prices (and those of corn, soybeans and rapeseed too) over the past eight months there seem to be a few around, amongst the speculative fraternity at least, willing to bank a few profits at these lofty heights.

The HGCA said that this year's delayed UK wheat harvest is "on par with that of 2008." Adding that final yields and quality remain uncertain, tentatively placing the former in the 7.1-7.5 MT/ha range, significantly below the 5-year average of 7.8 MT/ha.

In contrast, winter barley yields are good and should beat the 5-year average of 6.3 MT/ha, they add.

On the continent, German trading house Toepfer said that the wheat crop there would come in at 22.8 MMT, very similar to last year's 22.7 MMT in 2011 and a little above the USDA's estimate of 22.5 MMT. Their figure is almost a million tonnes higher than that of the German Farmers' Associations 21.9 MMT released earlier in the week.

Toepfer were also bullish on rapeseed production potential, pegging the German crop almost 33% higher than last year at 5.16 MMT, with full EU-27 output forecast at 19.64 MMT, a 3% increase on last year. They estimate the UK rapeseed crop at 2.49 MMT, a 10% reduction on last year. The HGCA say that thanks to an increase in the planted area the UK rapeseed crop could still be sizeable, although oil contents appear to be lower this year.

Russia's wheat crop keeps shrinking as harvesting progresses into the Urals and Siberia. The IGC cut their Russian wheat production estimate 4 MMT to 41 MMT yesterday, a drop of around 27% on last year. Even so, that's still around 2 MMT higher than the likes of SovEcon (39 MMT) and MDA CropCast (39.3 MMT), suggesting that further reductions could still be on the cards next month.