EU Grains Lower On The Day. Higher On The Week

Posted by Nogger - a legend in his own mind at 15:51 | Categorized as

04/10/13 -- EU grains closed mostly lower on the day but higher for the week. Strong demand underpins the market, re-enforced by last night's weekly export data from Brussels showing 746 TMT of soft wheat export licences were issued this week, the best total of the 2013/14 campaign so far.

Nov 13 London wheat settled GBP0.90/tonne easier at GBP158.75/tonne, whilst Jan 14 was also GBP0.90/tonne lower at GBP160.75/tonne. Nov 13 Paris milling wheat fell EUR0.50/tonne to close at EUR194.50/tonne. Nov 13 Paris rapeseed was down EUR0.75/tonne at EUR368.00/tonne.

For the week London wheat was up GBP2.50/tonne, with Paris wheat up EUR1.00/tonne and Paris rapeseed EUR0.75/tonne firmer.

Coceral raised their EU-28 soft wheat production estimate by 4.5 MMT from their June estimate to 135.2 MMT, a 7.6% increase on last year. Add on durum wheat output of almost 8.1 MMT and that gives us an all wheat crop of 143.3 MMT in Europe this year, which is 9.4 MMT higher than last year and 0.4 MMT above the USDA's September estimate.

Coceral have the UK wheat crop at a shade under 12.5 MMT versus 12.1 MMT from the USDA.

Coceral now forecast the EU-28 barley crop at 49.8 MMT, up 17.7% compared with a year ago. That includes a 34.5% hike in production here in the UK to 7.4 MMT. The EU-28 oilseed rape crop is now seen at 20.7 MMT, up 6.7% versus 19.4 MMT last year, with output in the UK down 15.4% to 2.15 MMT.

Russia's grain harvest lumbers on at 80 MMT off 78.3% of the planned area. Wheat accounts for 48.9 MMT off 81.1% of the anticipated area, barley is at 15 MMT off 83.2% and corn at 1.9 MMT off 15.8%. The FAO forecast Russia's grain crop at what therefore seems an unambitious 87.4 MMT, even though that is up 25.6% on last year, although it should be noted that the Russian Ministry's 80 MMT figure will be based on "bunker weight" before screenings etc are removed.

The FAO see Russia's grain exports rising by a third to 20 MMT in 2013/14, with wheat accounting for 14.5 MMT of that, along with 2.7 MMT of corn and 2.6 MMT of barley.

The Kazakh harvest is getting there at almost 17.5 MMT off 85.7% of plan. This time a year ago they'd harvested just over 14 MMT off 99% of plan. The Kazakh Ministry forecast a clean weight grain crop of 18 MMT, up 40.6% on last year.

The trade is awash with talk of winter planting in Russia and Ukraine being badly disrupted by constant rain. Although next week's forecast is drier, it is also colder. Ukraine agronomist Mike Lee says that he's still planted a viable winter wheat crop in November in Ukraine.

The Ukraine Ag Minister suggests that wheat production in 2014 could drop by a third to 15 MMT. Winter wheat planting is said to only be around a third done (as of Sep 30) at 2.2 million hectares. This time last year 4.6 million hectares of winter wheat were already in.

Meanwhile, Russian farmers have only sown around half of the expected 16.4 million hectares of winter grains for the 2014 harvest. This time last year they'd got more than three quarters of that area planted.

Back to this season, the pace of Ukraine grain exports is up on last year, although behind that needed to hit the 2013/14 Ministry forecast of 26-30 MMT. We're already a quarter of the way through the season and they've only exported 5 MMT of their exportable grain surplus - and that's without the addition problem of any freeze-related disruptions.

The Economy Ministry forecast 2013/14 grain production at 58 MMT, including 22.2 MMT of wheat, 7.5 MMT of barley and 26 MMT of corn. Domestic grain consumption in Ukraine is seen at around 28.5 MMT. What doesn't get exported this time round will of course be carried over into next season, making beginning stocks for 2014/15 much more sizable than they were at the start of the current season. A cynic might say that might be why they are already talking next year's output down?

Closer to home, FranceAgriMer today said that the average protein content of this year's French wheat crop was 11.2%, with test weights averaging 77.6 kg/hl, moisture 13.5% and that almost all the crop had a hagberg falling number of at least 220. They expect French wheat exports of 18 MMT (of which 11 MMT will go to non-EU destinations).