EU Grains Mostly Firmer As FSU Planting Delays Dominate
09/10/13 -- EU grains closed mixed, but mostly firmer, with Nov 13 London wheat settling GBP0.40/tonne higher at GBP161.50/tonne, whilst Jan 14 was GBP0.15/tonne firmer at GBP161.75/tonne. Nov 13 Paris milling wheat settled EUR1.25/tonne steadier to close at EUR197.50/tonne. Nov 13 Paris rapeseed was up EUR5.50/tonne at EUR373.75/tonne.
An enormous amount is being made of delayed FSU winter wheat plantings in the popular media, maybe more than is now warranted. Current prices offer a huge incentive to plant winter wheat compared to hanging on until the spring to opt for corn. The weather in Russia and Ukraine finally seems to be co-operating too.
Russian winter grains plantings are said to be completed on 9.1 million hectares, 55.5% of the original plan, although that is up 400k ha in a day. It would take 18 days of progress at that rate to reach the Russian Ministry's initial forecast of plantings at 16.4 million ha, although most are now forecasting a winter grains area of only 12.5-14.0 million ha.
Ukraine has planted winter grains on 4.4 million ha meanwhile. That includes 3.9 million ha of wheat out of an originally expected area of 6.7 million (58% of plan). To hit the Ministry's initial forecast Ukraine farmers would need to plant 140k ha of wheat each day for the next 20 days. That is a tall, but still achievable order, according to Ukraine agronomist Mike Lee.
As far as harvesting goes, Russia's grain crop is now 83.8% in the bin at 81.8 MMT. That includes a wheat crop of 50.2 MMT off 87.7% of the planned area and 15.2 MMT of barley off 87.8% of plan. They've also harvested 3.0 MMT of corn off 24% of plan and 3.3 MMT of sunseed off 23.5% of the expected area. The Russian Ministry forecast for a total grain harvest of 90 MMT looks comfortably achievable therefore.
Across the border, Kazakhstan has now harvested over 18.5 MMT of grains off 90% of the planned area. The harvest will be wrapped up by the weekend, producing a bunker weight crop of 20 MMT, say the local Ag Ministry.
Ukraine's grain harvest stands at 41.23 MMT off 77% of the planned area, that’s up from 36.26 MMT at this point last year. The corn harvest is now 30% done at 8.14 MMT.
Ukraine said that they had exported 2.3 MMT of grains in September, and 770 TMT in the first week of October. That brings the 2013/14 marketing year to date total to 6.8 MMT, up 16% on year ago levels. They need to ship 6.5 MMT per quarter to hit the Ministry's target of 26 MMT for the full season.
A report on the Farmer's Weekly website said that British farmers could plant a record wheat area this year, topping the 2.086 million ha planted in 2000. Last year's area was only 1.61 million ha due to the adverse weather conditions. A return to "normal" yields would potentially therefore give us a UK crop of around 16 MMT, maybe more, versus only 12.5 MMT or so this year. That pushed new crop (2014) London wheat lower.
The pound was sharply weaker on the day, due to news that British August industrial production was down, placing thoughts of the fragile UK economic recovery into question. That would normally support London wheat, but not when prices are already too expensive to consider exports.
The Romanian Farmers League estimated Romania’s 2013 corn crop at 9.0 MMT, up more than 50% versus output of 5.95 MMT in 2012.
There's a lot of new crop corn lined up to come into the UK from Eastern Europe/the Black Sea this winter, tapering demand for feed wheat.
USD7/bushel is looking like a tough resistance level to break on Chicago wheat, as is EUR200/tonne in Paris.
