EU Wheat Higher As Russian Crop Downgraded Again

Posted by Nogger - a legend in his own mind at 19:16 | Categorized as

30/08/12 -- EU wheat closed mostly higher as Russia's production hopes took a further knock with Nov 12 London wheat up GBP1.25/tonne to GBP206.00/tonne and Nov 12 Paris wheat EUR1.75/tonne higher at EUR266.75/tonne.

SovEcon cut their Russian grain production estimate to 70.5 MMT, and warned that it may yet fall below 70 MMT, from 71.0-72.5 MMT last week and 94 MMT in 2011. Wheat output is now only forecast at 38 MMT - their smallest crop since 2003.

They went on to say that as the harvest progresses into Siberia and the Urals, the former could have it's worst wheat harvest, of maybe no more than 4 MMT, in 32 years.

Even so the Russian Deputy Ag Minister said, on the eve of a high level meeting to discuss the issue, that a grain export ban was not currently necessary - and that one was unlikely to happen before the beginning of December at the earliest.

Another widespread overnight soaking continues to frustrate UK farmers' attempts to get the wheat harvest in. The HGCA estimated that 40% of the crop has been cut nationally, with up to 80% of the crop said to be in the barn in the South East.

They stood by last week's estimate of an average national yield of somewhere between 7.1-7.5 MT/ha, which would be around 4-9% lower than the 5-year average of 7.8 MT/ha.

There are probably plenty who would peg yields at the lower end of that scale rather than the higher end. A final yield of 7.1 MMT would be the worst since 1992.

The HGCA said that the winter barley harvest is 98% complete, with yields better than average at 6.4-6.7 MT/ha. Spring barley harvesting is 25% complete, with yields in line with average at 5.3-5.4 MT/ha. Winter OSR yields are slightly better than average at 3.4-3.6 MT/ha, although seeds are "on the small side, and oil contents are lower than normal ranging from 40-45%."

MDA CropCast released their latest production estimates, placing the EU-27 wheat crop at only 128.6 MMT, which would be 6.4% down on last year and 4.3 MMT less than the USDA's current forecast.

MDA CropCast placed EU-27 wheat yields at an average 5.23 MT/ha, which is broadly in line with the EU Commission's MARS estimate of 5.29 MT/ha released earlier in the week. The former are a bit more bullish on corn prospects, estimating EU-27 average yields at 6.86 MT/ha, versus 6.28 MT/ha from MARS. That puts the EU-27 corn crop at 61.4 MMT versus 60.2 MMT last year.

The USDA attaché estimated Morocco’s all wheat production at 3.4 MMT, from 2.8 MMT previously. Barley production was raised from 0.9 MMT to 1.1 MMT. Morocco's wheat import requirements were cut from 5.0 MMT to 4.5 MMT.

France is traditionally their biggest soft wheat supplier, although Argentina and Uruguay have also come to the fore in 2011/12. Canada provide more than half of their durum requirements, with France accounting for a further 29% and Argentina 15%.

Morocco’s barley imports in 2011/12 have been dominated by French supplies (39%), followed by exports from Argentina (26%), Russia (10%) and Ukraine (8%).