EU Grains Down Again, FAO Predicts Record World Wheat, Corn And Soybean Crops

05/09/13 -- EU grains closed weaker on harvest pressure and calls from the FAO for record world wheat, corn and soybean production in 2013/14.

London wheat hasn't been helped by the pound rising close to 1.19 versus the euro, a level it has only been above fleetingly since the first few weeks of the year. Both the Bank of England and the ECB left interest rates in the UK and Eurozone unchanged today.

Nov 13 and Jan 14 London wheat both settled GBP1.50/tonne easier at GBP154.50/tonne and EUR156.75/tonne respectively, whilst Nov 13 Paris milling wheat fell EUR0.25/tonne to close at EUR187.50/tonne.

Both Nov 13 London and Paris wheat are not too far off retesting the 2013 closing lows of GBP150.75/tonne and EUR182.00/tonne respectively.

The FAO's Agricultural Market Information System (AMIS) increased their forecast for world wheat production this year from 704 MMT previously to 710 MMT, a 50 MMT or 7.6% increase on last year's crop.

"Prospects are favourable in the Northern Hemisphere. Winter wheat harvest is complete and spring wheat is in late-maturity to harvest stages. In the US, Canada, Russia and Kazakhstan spring wheat conditions are good though final yields will depend on favourable weather in the coming month," they noted.

They also predicted a record world wheat crop in 2013/14, at 983 MMT that would be up 108 MMT, or 12.3%, versus 2012/13 and way higher than the USDA's current 957 TMT estimate.

"General conditions are good. In the US approximately half of the corn crop is in good to excellent condition and in spite of dry weather and rising temperatures in August, a bumper production is expected largely due to increased planted area. In Canada, conditions are favourable and yields are expected to be average to above average. In the EU, prospects are good except in northern Italy, Hungary, Austria, Slovenia and Croatia where there is concern due to late sowing and dry and hot conditions," they said.

In their first forecast for world 2013/14 soybean production they predicted a crop at an all-time high of 284 MMT, up 18 MMT or 6.8% on last year.

At home, ADAS said that "near perfect harvest weather coincided with peak crop maturity, an estimated 1.3M ha of combinable crops were harvested (in the week through) to 3 September. This is the highest rate of clearance in a single week for at least the last 5 years and included 45% of the wheat area and almost 40% of the spring barley area."

They now estimate that the domestic wheat crop is 85% harvested, along with 70% of the spring barley and oat crops. Winter OSR is almost finished at 95% done, with 10% of the spring OSR crop harvested.

They have wheat yields averaging 7.6-7.7 MT/ha, winter barley 6.5-6.9 MT/ha, spring barley at 5.5-5.7 MT/ha and winter OSR at 3.2-3.4 MT/ha. All in all that's generally a fair bit better than was expected back in the spring/early summer.

French exports continue to press on well. The port of Rouen saw traffic of 171,390 MT of grains in the past week. Algeria was the largest soft wheat home, taking 78,750 MT (there was also a small 3,300 MT coaster destined for the UK) along with 39,500 MT of malting barley loaded for China.

The French Federation of Oilseed Producers estimated the 2013 OSR crop there at 4.5 MMT, a drop of 17% on last year and 13% below the 5-year average. A combination of lower plantings, higher than normal winter losses and reduced yields was to blame. They predict winter OSR plantings for the 2014 harvest at 1.5 million ha, down versus 1.6 million a year ago (although the final harvested area was only 1.45 million due to quite heavy winter losses).

The Ukraine Ministry say that their winter OSR crop is already 50% planted. They have the total winter grains cropping area up 2.4% versus last year at 8.2 million hectares.

Russia's wheat harvest is 58.7% done, producing 40.5 MMT to date, with yields currently up 42% at 2.75 MT/ha, say the Ag Ministry there. They've stepped up their participation in the last few Egyptian wheat tenders. The latter have now bought 830 TMT of wheat in the past week, taking their total 2013/14 tender purchases so far to 1.91 MMT since the beginning of July.