EU Grains Mostly Lower As New Crop London Wheat Trades Below GBP150/Tonne

07/01/14 -- EU grains traded mostly lower, although Jan 14 London wheat closed GBP0.50/tonne firmer at GBP161.00/tonne. However Nov 14 ended the day setting a new lifetime contract low and the contract's lowest ever close of GBP150.00/tonne, which was GBP0.40/tonne easier on the day, having traded down to GBP149.50/tonne for the first time ever at one stage.

Jan 14 Paris wheat finished EUR2.50/tonne easier at EUR206.25/tonne, Jan 14 Paris corn closed EU0.25/tonne weaker at EUR175.00/tonne, whilst Feb 14 Paris rapeseed slumped EUR4.75/tonne to EUR362.50/tonne.

Fundamental news is pretty scarce ahead of Friday, with news services in Russia and the FSU still closed for public holidays.

What we do know is that Ukraine exported an impressive 4.4 MMT of grains in December, a monthly total only bettered by November's record 4.6 MMT. They are really shifting up a gear now that this year's all-time high corn harvest is in, aided by warmer than normal conditions keeping freeze disruptions to logistics at bay.

They've exported 18.5 MMT of grains in the first half of the season, and the Ministry estimate that they will finish 2013/14 shipping a record 32.5 MMT, and increase of 41.3% on last year.

Russia's 2013/14 grain exports meanwhile are a bit more modest, but at 15.7 MMT by the end of December they still represent a rise of 21.4% versus the same period a year ago.

Despite the growth in shipments out of the FSU, EU exports are also running well ahead of year ago levels - although there was no update on export licences out of Brussels last week due to the holidays.

Both France and Germany are said to have a heavy shipment program lined up for grains for the remainder of January.

Further figures are filtering through from Informa's raft of 2014/15 production numbers released on Friday night. They see the EU-28 wheat crop at 143.1 MMT, unchanged from 2013/14. They have the US wheat crop at 63.7 MMT, up nearly 10%, whilst they say that India's wheat crop will rise 4.4% to a record 96.6 MMT. In the FSU they see Russia's crop down 5.8% to 48.5 MMT, with Ukraine's falling 6.8% to 20.5 MMT, although output in Kazakhstan will rise 3.8% to 16.3 MMT, they predict.

The EU corn crop will rise 2.3% to 66.4 MMT this year, they predict. Interestingly, they are reported as saying that Ukraine's corn crop will fall from 29 MMT in 2013 to 20 MMT this year. Yet reduced winter grain plantings in Ukraine will see the 2013 corn planted area rise some half million hectares or so, say the Ukraine Ministry. If that's correct then it's difficult to see production falling to that extent, or indeed at all, so I guess that we'll have to wait and see on that one.

For rapeseed production, Informa are predicting an EU-28 crop of 21.1 MMT this year, a rise of 1.4% on last year.

Whilst the US is gripped by heavy snow and extreme cold, things have been unusually mild in the FSU, prompting some to suggest that lack of adequate snow cover could prove to be a problem if and when a hard freeze does arrive. There are moisture concerns here too. "A dominant ridge of high pressure has prevailed in European Russia, blocking precipitation and increasing worries about drought in winter wheat and rapeseed. Conditions have become extremely dry in Ukraine, especially, where less than half of normal precipitation was received in recent weeks. The 90-day precipitation was also extremely deficient," say Martell Crop Projections.

We must also wonder what the UK wheat crop will look like in some parts of the country when it emerges from being under 2 feet of water. Surely we can't be in for 3 disasters in a row, can we?