Nogger's Blog

27/06/13 -- EU grains were mostly lower once more, extending recent losses with Jul 13 London wheat setting a fresh near 18 month closing low for a front month. Other London wheat months gained a bit of support from a sharply weaker pound which fell to a more than 3-week low against the dollar on ideas that the Bank of England will raise QE before too long, but still closed lower on the day.

Jul 13 London wheat finished GBP1.50/tonne lower at GBP158.00/tonne, and with Nov 13 ending down GBP0.25/tonne at GBP166.90/tonne. Nov 13 Paris wheat settled EUR0.50/tonne easier at EUR196.75/tonne.

The FSU grain harvest is picking up pace. Russia has now harvested 3.7 MMT of grains, including over 1.9 MMT of wheat with early yields up 26% at 3.88 MT/ha, say the Ag Ministry. More than 1.0 MMT of barley is also in the bin, with yields up 38% at 5.30 MT/ha, they add.

Ukraine has harvested 3.5 MMT of grains so far, mainly in the southern districts of Odessa (1 MMT) and Nikolayev (740 TMT), say the Ag Ministry there. That total includes 1.81 MMT of barley and 1.52 MMT of wheat. Yields are said to be up 48% on last season. Traders in Ukraine say that they expect to begin exporting new crop wheat my the middle of July.

MDA CropCast cut their world wheat crop projection by 200 TMT from last week due to acreage reductions in Canada. Even so they still see global output up 5.7% this year.

The EU will harvest 131.36 MMT of soft wheat they said, up 700 TMT from last week and a rise of 3.8% versus last year. The EU corn crop meanwhile will rise 11.3% compared with 2012, barley production here will increase 4.2%, and OSR output by 3.4%, they added.

Good winter rains are seen boosting Spain's 2013 cereal crop very significantly. The Spanish Ag Ministry forecast the soft wheat crop there at 5.8 MMT, up 23.4% on last year's 4.7 MMT. Durum production will jump 83% to 810 TMT and barley production increase 32% to 7.9 MMT, they added.

Tunisia's Ag Ministry said that their grain crop in 2013 would fall to only 1.36 MMT, versus 2.2 MMT last year, including 820 TMT of durum wheat, 200 TMT of soft wheat and 320 TMT of barley. Production amongst the other major North African nations is expected to rise however. The HGCA today said that grain output between Algeria, Egypt, Libya, Morocco and Tunisia will rise 17% this year, led by an 80% increase in production from Morocco.

Pakistan are rumoured to be buying Black Sea wheat. Jordan has issued a tender to buy 150 TMT of wheat and 100 TMT of barley.

New crop Ukraine feed wheat is said to be offered at around USD245/tonne FOB the Black Sea (the equivalent of GBP161/tonne). French milling wheat is at EUR194/tonne deld Rouen for July (GBP166/tonne). French feed barley is offered at EUR181/tonne deld for July (GBP155/tonne), with French malting barley quoted at EUR206/tonne FOB Creil (GBP176/tonne). French corn is offered in the market at EUR225/tonne FOB Bordeaux (GBP192/tonne) and French OSR is quoted at EUR401/tonne (GBP343/tonne) FOB Moselle for harvest delivery.

Tomorrow's USDA planting estimates and June 1st stocks report may provide some direction, but failing that, harvest pressure looks like weighing on the market a little while longer yet.