Nogger's Blog

11/09/13 -- EU grains closed mixed with Nov 13 London wheat settling GBP0.50/tonne higher at EUR155.00/tonne and Jan 14 also GBP0.50/tonne firmer at GBP157.45/tonne. Nov 13 Paris milling wheat rose EUR0.25/tonne to EUR188.00/tonne whilst Nov 13 Paris rapeseed settled EUR1.25/tonne lower at EUR372.25/tonne.

Chicago wheat traded 2-3 cents higher for most of the morning, but turned a bit lower in afternoon trade after revised US weather forecasts showed a chance of rain in some of the driest areas of the western winter wheat belt on the Central and Southern Plains where planting for 2014 is just about getting underway.

The EU wheat market remains range-bound. London wheat has only closed above GBP160/tonne once in the past six weeks, and Paris wheat above EUR190/tonne twice in the past seven weeks. The pound rose above 1.58 against the US dollar for the first time since February and hit an intra-day high of 1.1925 against the euro today - it's highest since January. That helped keep a lid on London wheat.

The French Farm Ministry late yesterday raised their forecast for soft wheat production there from 36.1 MMT to 37 MMT, a nine year high and more than 4% up on last year. Yields have averaged 7.42 MT/ha this year, up slightly versus last year and the 5-year average despite early harvest fears, they said.

The French corn crop is forecast 3.8% higher at 15.90 MMT, but barley output is seen falling 7.2% to 10.53 MMT, and OSR production is down by more than 20% to 4.36 MMT.

Separately FranceAgriMer forecast 2013/14 French soft wheat exports rising to 18.1 MMT, a 5.2% increase versus 17.2 MMT last season. Exports to non-EU destinations are forecast to rise more than 11% to 11 MMT, and some private estimates are as high as 12 MMT. While the supply side of the French market leans bearish, can they export more than the 9.9 MMT shipped outside the EU in 2012/13 whilst the Black Sea continues to sell to Egypt and others at cheaper levels?

French wheat has so far failed to make any inroads into Egypt this season, who've now booked more than a million tonnes of wheat in the past fortnight, all of it from cheaper sellers on the Black Sea. In yesterday's tender, where they purchased a Ukraine, Russian, Romanian 235 TMT combo for Nov shipment, French wheat was priced at USD278.50/tonne including freight versus Black Sea offers around USD267-268/tonne.

French cash prices today are around EUR183/tonne for milling wheat FOB Rouen (around GBP154/tonne), with feed barley priced at EUR175/tonne (GBP146.50/tonne) and new crop corn as available FOB Bordeaux at EUR167/tonne (GBP140.50/tonne).

The EU Parliament today voted to cap the proportion of biofuels used from food crops in transport fuels to 6%, supporting an earlier motion from the EU Commission. The proposal will now go before the heads of the 28 member states for final ratification.

A record world rapeseed crop is on the way, according to Informa Economics, led by an 18% jump in Canadian production to 15.7 MMT. The EU-28 crop will rise 7% this year to 20.5 MMT, they added. Ukraine has exported 0.9 MMT of OSR in the first nine weeks of the new marketing year, meaning that they could be all done before Christmas, say Agritel. They won't mind that a bit with a monster corn crop on the horizon.

Heavy late August and early September rains in the FSU countries are proving to be a mixed blessing. Oil World say that they've improved conditions considerably for winter OSR planting in Ukraine which is about halfway done. They've also boosted corn production potential there. The Ukraine Ministry today increased their corn production forecast from 26 MMT to 29-30 MMT, smashing the previous all time high of 22.8 MMT set in 2011 by some considerable distance.

The rains in Ukraine have however stalled the sunflower harvest and are also leading to slow progress, and possible quality losses, for late wheat harvesting in Russia and Kazakhstan - northern Kazakhstan has had 36mm of rain in the past two days.

The Russian wheat harvest is 63.9% complete, producing a crop of 42.3 MMT to date, with yields up 39.7% on last year at 2.64 MT/ha. The Kazakh harvest stands at over 6 MMT off around a third of the combinable crop area.