Nogger's Blog

09/08/13 -- EU grains closed mostly lower, with front month Nov 13 London wheat now down for seven straight sessions setting more than one year lows in the process.

London wheat closed with Nov 13 GBP0.75/tonne lower at GBP156.20/tonne, Jan 14 was GBP0.80/tonne easier at GBP158.20/tonne and Nov 13 Paris wheat was unchanged from yesterday's lowest front-month level since December 2011 at EUR183.00/tonne.

For the week Nov 13 London wheat fell GBP6.50/tonne, with Jan 13 losing GBP5.50/tonne and Nov 13 Paris wheat shedding EUR3.50/tonne. That may sound harsh on London wheat, but note that GBP156.20 on the Nov 13 position is the equivalent of more than EUR181/tonne compared with the higher spec Paris milling wheat contract.

The French Farm Ministry raised their forecast for soft wheat production there from 35.9 MMT to 36.1 MMT, a 1.7% rise on output of 35.5 MMT last year. FranceAgriMer said that as of Aug 5 the French soft wheat harvest advanced from 30% done a week previously to 71% harvested, almost in line with last year's 74%. The winter barley harvest is complete and 58% of the spring barley crop has been cut, they said. Corn crop conditions held steady at 55% good/excellent, they added.

France will make it's largest ever shipment of wheat to Saudi Arabia next week when the MV Shekou Sea will load around 60 TMT of soft wheat from the ports of Nantes and Montoir bound for the Middle Eastern nation. The Saudi's normally only buy hard wheat.

Russia’s Ag Ministry said as of Aug 8th Russia had harvested 41.5 MMT of grain with an average yield of 2.79 MT/ha, up 28.6% versus 2.17 MT/ha a year ago. Wheat accounts for 31.6 MMT of that, with an average yield of 3.07 MT/ha, up by almost a third on year ago levels.

The harvest in Kazakhstan is only just getting going, producing a little over 1 MMT so far. Early yields are said to be more than 60% up on this time a year ago.

The rumblings of a month or so ago that all was not well with crops in Russia and Kazakhstan have, as yet, proved unfounded. "Russia’s Volga district has received very rainfall since mid July when a severe drought was in effect. Several Volga farm districts had declared a drought emergency, predicting grain losses up to 30%, before soaking rains developed mid month," said Martell Crop Projections.

In Kazakhstan "growing conditions have improved in spring wheat and barley with frequent showers and generous rainfall the past 4-5 weeks. July rainfall was twice normal in the 3 key grain districts Kostonai, North Kazakhstan and Akmol. Producers this week said 67% of small grains were in good-excellent condition. That is a major improvement from May and June, when conditions were exceptionally cool and dry," they add.

Romania's wheat crop is forecast to be up 40% on last year at a record large 7.3 MMT, which helps explain their recent successes in Egypt's tenders.

Ukraine's grain harvest (excluding corn) currently stands at 31.7 MMT, including 22.3 MMT of winter wheat and 340 TMT of spring wheat. Last year's total wheat crop was less than 15.8 MMT. Ukraine could export a record volume of grain in 2013/14, making it the third largest exporter in the world, according to the local Ag Ministry.

Bumper production in Eastern Europe and the FSU is rarely good news for UK growers. New crop Ukraine corn can currently be shipped into the UK at competitive prices to domestic wheat.