EU Grains Within Touching Distance Of Breaking Out Of Recent Trading Range

27/11/13 -- EU grains closed mostly a little firmer, with both London and Paris wheat not quite managing to break through their respective recent trading ceilings of GBP165/tonne and EUR208/tonne, but coming pretty close.

The session ended with Jan 14 London wheat up GBP0.40/tonne at GBP164.75/tonne, Jan 14 Paris wheat EUR1.50/tonne firmer at EUR207.50/tonne, Jan 14 Paris corn up EUR0.50/tonne at EUR176.25/tonne and Feb 14 Paris rapeseed EUR0.50/tonne higher at EUR378.75/tonne.

Egypt's GASC bought 60 TMT of French wheat for Dec 16-31 shipment in their tender. The price paid was USD291.84/tonne FOB plus USD20.98/tonne freight for a net C&F price of USD312.82/tonne.

Whilst US wheat was offered much lower, at USD274.28 FOB, freight costs pushed the price of that up to USD315.75 C&F. Interestingly they didn't book the one cargo of Romanian wheat which was offered at USD295.00/tonne FOB, with freight of only USD14.88/tonne taking the C&F price to USD309.88/tonne.

Russia bought 28,620 MT of wheat in it's now regular twice-weekly tender. That takes the total purchased so far to just under 400 TMT - way below the originally stated target to buy 2-3 MMT by the end of the year, and 5-6 MMT in total in 2013/14.

The Russian harvest is almost 95% complete at 94.8 MMT in bunker weight, including 54 MMT of wheat, 16.3 MMT of barley and 9.9 MMT of corn. The latter being off 77% of the planted area.

Russian analysts ProZerno forecast a clean weight grain harvest of 90-90.2 MMT, up around 27% on last year. They said that Jul/Oct grain exports were 11.5 MMT, and a further 2.5 MMT in Nov and 2.0 MMT in Dec will take the half marketing year total to 16 MMT (Jul/Dec). Full season exports will total 22.0-22.5 MMT, they said. That will include around 16 MMT of wheat, 2.7-3.0 MMT of barley and 2.5-2.6 MMT of corn, they estimate.

The Kazakhstan grain harvest is over at just shy of 21 MMT in bunker weight, a final figure will be issued by the Ministry at the end of December.

The Ukraine harvest is almost complete, and thanks to a bumper corn crop the Ag Ministry there today increased their 2013/14 grain export estimate from a record 30.0 MMT to a new all-time high of 32.5 MMT.

Defra said that the UK had imported 829 TMT of wheat in Q1 of 2013/14 (Jul/Oct), yet only estimated imports for the full season at 1.615 MMT.

UK wheat consumption for feed was forecast 14% down on last year at 5.9 MMT. H&I demand is seen up 3% at 7.8 MMT.

Increased production, and opening stocks of almost 1 MMT, means that UK barley availability is estimated at 8.164 MMT, up 22% versus last season.

Barley used in feed is forecast 6% higher at almost 3.5 MMT, whilst H&I usage is forecast steady at almost 1.86 MMT. That leaves a UK barley surplus of a hefty near 3.5 MMT this season, almost double that of 2012/13. Exports in Q1 of 2013/14 were 256 TMT, up on last year, but a relative drop in the ocean.

In addition "maize imports are forecast to continue at high levels as the relative price of the grain compared with wheat, makes it more competitive for use in animal feed and distilling," they said.

They also noted that the largest oat crop in 40 years means that imports will drop, and that there will be increased oat usage in the animal feed sector.

Will UK wheat imports drop to less than 800 TMT for the final three quarters of the season when we've imported more than that in the first quarter? Also, based on the current barley usage and export pace, there's going to be a lot of that left over at the end of the season. Meanwhile UK grain production looks like it could rebound sharply in 2014.

Do the math, as they say across the pond. It's all right, we can say what we like about them today, they're all stuffing their faces with deep-fried turkey for Thanksgiving Day. Do you know why they call it that? It's because today's the day that Americans give thanks to us for inventing them!