Nogger's Blog

23/08/13 -- EU grains were lower for much of the day, but edged higher later in the session after afternoon US weather forecasts turned hot and dry for next week. That sent soybean prices soaring, taking CBOT corn and wheat with it, and EU grains tagged along for the ride.

At the close Nov 13 London wheat was GBP1.00/tonne firmer at GBP156.75/tonne and with Jan 14 also up GBP1.00/tonne at GBP159.00/tonne. Nov 13 Paris wheat finished the day EUR0.25/tonne firmer at EUR185.50/tonne.

Front month Nov 13 London wheat was up GBP4.15/tonne on the week, but GBP6.10/tonne lower since the beginning of the month. Nov 13 Paris wheat was up EUR1.75/tonne on the week but down EUR4.25/tonne since the turn of the month.

Paris wheat seems to have found its level, holding up above the EUR180/tonne mark, and just above the EUR179-180/tonne lows of late 2011. Paris corn has already taken out the 2011 lows, but has rebounded slightly this week from levels not seen since the summer of 2010 a couple of weeks ago.

As the wheat harvest draws to a close in many parts of Europe, attention is now turning to corn. FranceAgriMer today said that the French wheat harvest advanced to 98% compete, with the spring barley crop 99% done. They have 95% of the French corn crop at the silking stage, up from 88% a week ago and versus 95% this time last year. They cut the proportion of the corn crop rated good/excellent by one point to 54% (and well behind the 74% rated G/E a year ago) and increased poor/very poor by a similar amount to 17% (versus only 3% this time last year).

Arvalis estimated the French corn crop at 14.8 MMT versus 15.6 MMT in 2012, that's a fair bit lower than Strategie Grains' estimate of 16.0 MMT and the French Farm Ministry's 15.6 MMT. The German farmers association, DBV, yesterday estimated corn output there at 4.49 MMT, down 1 MMT versus last year. Harvesting of Spain's corn crop should begin in 2-3 weeks. With a planted area up 10% and good rains they should beat last year's harvest total of 4.4 MMT.

Further east in countries like Hungary and Romania corn production is seen sharply higher this year, which should more than compensate for decreases in output from France and Germany to give the EU-28 a crop around 10-12% higher than last year.

Ukraine meanwhile is also expecting a record corn crop of 26-29 MMT in 2013.

European wheat is priced to sell. EU soft wheat exports are currently running at 3.2 MMT, up more than 120% on this time a year ago. The leading French export hub of Rouen shipped 161 TMT of soft wheat this week, the second week of robust exports in a row.

Talk of quality problems with Russian wheat continue, Ukraine has plenty of wheat, the logistics of getting it to market and the timely and efficient loading of vessels is their problem.

Russia's 2013 grain harvest now stands at 55.2 MMT off 47.3% of the planned area. Wheat accounts for 36.8 MMT of that, off 50.1% of the plan, with average yields still holding up surprisingly well at 2.93 MT/ha, a rise of 41.5% on this time a year ago. They've also harvested 10.5 MMT or barley off 54.1% of the plan.

Winter grain plantings in Russia have almost reached the 1 million hectare mark of the planned 16.4 million ha. The winter wheat area is expected to be around 13 million ha.

The Russian Ministry are, at least for now, standing by their forecast for grain production of 90 MMT this year. The Russian Meteorological Agency today cuts its grain harvest forecast to 88-90 MMT.