EU Grains Rise On Ideas Recent Declines Overdone

18/10/12 -- EU grains posted decent advances with Nov 12 London wheat up GBP3.00/tonne to GBP201.40/tonne and with Nov 12 Paris wheat up EUR3.25/tonne to EUR259.75/tonne.

US grains posted a second day of good gains and Europe followed suit on ideas that recent declines have been overdone.

Strategie Grains estimated the EU-27 soft wheat crop down 0.7 MMT from last month at 123 MMT, a drop of 4.4% on last year's 128.7 MMT. They also cut EU-27 corn production by 0.9 MMT to 52.8 MMT, 20% down on last year.

In amongst all that was a downwards revision for UK wheat output to 13.46 MMT with yields at 6.75 MT/ha off 1.99 million ha. That puts them broadly in line with other recent forecasts from Defra and the NFU, leaving us with a wheat crop around 12% lower than last year.

The supply and demand picture however is not all roses. Customs data shows that UK wheat exports were appalling at just 26,804 MT in August, bringing the 2012/13 year-to-date total to 65 TMT - less than a quarter of the 282 TMT exported at this point a year ago.

Imports meanwhile are up 164% to 341 TMT vs 129 TMT in 2011/12.

The UK clearly has a very poor crop that nobody wants internationally, so what are we going to do with it all?

Ensus have announced that they will take wheat down to 60kg/hl bushel weight, at an unspecified discount, although "the policy would be kept under review as the firm discovered more about the extraction rates of lower bushel weight grain," according to the Farmer's Weekly.

Ukraine's Ag Ministry say that the country will plant 8.5 million hectares of winter grains this year (versus 8.4 million a year ago), of which 7.4 million is already in the ground. Winter wheat plantings are at 6.3 million hectares, which is 94% of the planned area. Crop conditions so far are far better than they were a year ago.

Benign weather also sees Russian winter plantings currently at 15 million hectares against a planned 16.8 million this year.

"Showers this past week further improved moisture across central and southwestern Ukraine, Belarus, and Central Region. However, dryness continues to stress wheat establishment across far eastern Ukraine, northern North Caucasus, and Volga Valley. Showers should improve conditions slightly in central Volga Valley this week, but drier weather is expected elsewhere across the winter wheat belt," say MDA CropCast.

Closer to home "rains this past week did improve moisture a bit across northwestern Spain, Italy, central Romania, and Former Yugoslavia, which will allow establishment there to improve. However, additional showers in northwestern France and UK maintained some wetness there," they add.