EU Grains Mostly Lower, Are We Breaking Out To The Downside?
12/12/13 -- EU grains closed mostly lower with Jan 14 London wheat ending down GBP1.00/tonne at GBP163.55/tonne and Jan 14 Paris milling wheat settling EUR0.75/tonne easier to close at EUR205.75/tonne. Feb 14 Paris rapeseed fell EUR3.00/tonne to EUR366.00/tonne, whilst Jan 14 Paris corn dropped EUR1.00/tonne to EUR176.00/tonne.
The market, which has been stuck in a relatively sideways move for some time, appears to be showing signs of breaking out to the downside. Whether that is purely a function of year-end selling, which will correct itself in the new year, remains to be seen.
The strong, record even, pace of EU wheat exports is a steadying influence. The USDA raised their forecast for those to an all-time high 25 MMT on Tuesday, up 1 MMT on last month and versus 22.62 MMT in 2012/13. Wheat usage in feed was dropped 1 MMT to 51.5 MMT to account for this.
FranceAgriMer said that soft wheat production there came in at 36.84 MMT this year, down slightly from the previously forecast 36.96 MMT, but up on output of 35.62 MMT last year. Exports (including flour) were raised from last month's 18.975 MMT to 19.645 MMT, cutting ending stocks from 2.9 MMT to 2.4 MMT.
ADAS said that the UK wheat crop could amount to around 14.5-15.1 MMT in 2014, if we ignore the 5-year average yield (which has after all included 2 very difficult years) and go with the 10-year average of 7.8 MT/ha instead. Production in 2013 was 12.1 MMT you may recall, so this would represent an increase of around 20-25%.
"Early indications are that the winter crops have all established well and are in good condition going into winter, however early drilling and lush growth does make the crops more susceptible to lodging and disease so, good management in the spring will be required," they said.
The IGC released a mountain of data concerning crop production for next year and beyond. These numbers are obviously intended to be very much guidelines only, as they can't possibly predict any potential weather-related crop disasters - or any bumper production years come to that.
Overall they see the 2014/15 world wheat crop up only marginally (+0.4%) next year at 699 MMT (based on their assessment of 2013/14, not the USDA's), with corn production falling by a similar percentage to 944 MMT. The global barley crop is forecast down 2.1% at 140 MMT, and the OSR harvest little changed at 68.2 MMT at this early stage.
They see world wheat consumption almost matching production next year at 697 MMT, with corn usage at 940 MMT and that of OSR at 67.7 MMT, so overall there's no big build in ending stocks anticipated.
Going forward, that is generally also the case. World wheat carryout is forecast holding relatively steady between 182-184 MMT from 2013/14 as far forward as 2018//19. Corn ending stocks are also seen flat-lining at around 151-152 MMT over the next five years, with those of OSR also steady at between 6-7 MMT.
The world's 8 major wheat producing nations are seen increasing their cropped area from 116.7 million hectares to 122.1 million by 2018/19, with Europe's up from 25.7 million ha to 26.5 million. Production amongst these countries is forecast to rise from 357.4 MMT in 2013/14 to 375.5 MMT in 2018/19. Europe's output is forecast almost the same in 5 years time as it is now (142.8 MMT). Russia's crop is seen rising from 50.5 MMT to 56.8 MMT, with Ukraine's up from 22 MMT to 24.5 MMT and America's increasing from 57.5 MMT to 65 MMT.
The IGC interestingly don't forecast the rapid expansion in corn plantings in Ukraine and Russia that their respective Ministries foresee. The Russian Ministry said only this week that they anticipate corn production there growing to 25 MMT by 2020, the IGC have output in 2018 at only 9.4 MMT. Ukraine's crop meanwhile is only pencilled in at 30.7 MMT in five years time, barely more than this year's expected output.
