Nogger's Blog

08/03/13 -– EU grains closed mixed, with news from the release of the 17.00 London time USDA report coming through too late in the day to influence European markets. It's been a difficult week for wheat, with ABARES and the FAO forecasting upcoming world production at a second highest in history, and the USDA's chief economist alluding to the possibility of all time high record output for 2013/14.

On the day, London wheat closed with Mar 13 down GBP0.75/tonne at GBP196.25/tonne and new crop Nov 13 GBP1.15/tonne higher at GBP182.75/tonne. Mar 13 Paris wheat was EUR4.25/tonne lower at EUR234.00/tonne, May 13 was EUR0.75/tonne easier at EUR230.25/tonne.

On the week, Mar 13 London wheat fell GBP7.25/tonne to the lowest level for a front month since August. New crop Nov 13 fared somewhat better, losing just under a fiver. Mar 13 Paris wheat slumped a hefty EUR16.00/tonne, an eight month low for a front month across the Channel.

Yet amazingly there is bullish news around. Brussels releasing almost 607 TMT of soft wheat export licenses this past week means that EU exports are now running 46% ahead of year ago levels at 13.7 MMT this season.

In addition the HGCA now place the English & Welsh wheat planted area as of Dec 1 at 1.394M ha, down 25% on Dec 2011 which is less that the 20% decline that most official estimates have suggested up until now. "However, some freezing conditions through the winter and drier weather in late February may have allowed further plantings – though in less than ideal conditions," they add.

In contrast they now suggest that winter OSR plantings in England and Wales were only down 1% although "crop abandonment will be higher than usual so the year-on-year decline in harvest area is likely to be noticeable," they note. Many would suggest that crop abandonment will be very high this year, particularly in the north.

The winter barley area is seen down 19% in England & Wales "a noticeable increase in the spring barley area is expected due to the wet autumn diverting land towards spring cropping," they add.

As the HGCA themselves noted though, just because UK production prospects look dim it doesn't necessarily mean that prices can only go up. The UK wheat crop accounted for less than 2% of global production last year, whilst we weighed in with 4.3% of global rapeseed output. Even if the UK wheat crop was to slump to disastrous 8 MMT this year it would be compensated for by the extra volume anticipated from Ukraine alone.

In other news, FranceAgriMer said that spring barley plantings there are 20% complete, up from only 7% a week ago, although still trailing last year's pace of 35%. French wheat crop conditions are unchanged from a week ago at 66% good/excellent, versus 68% this time last year. Winter barley rated good/excellent is up one point on last week to 67%, versus 61% a year ago.

The forecast very cold spell coming next week, with a hard freeze expected across the whole of northern Europe Tuesday through to Friday, could offer a threat to unprotected crops.