EU Grains Mixed As Crop Prospects For 2014 Debated

21/02/14 -- EU grains closed mixed, as the trade continues to debate and ponder on crop production prospects around the world. How will winter wheat, in particular, emerge from dormancy and how will spring plantings go? They are perhaps the two main questions being asked.

Mar 14 London wheat closed GBP1.10/tonne firmer at GBP155.60/tonne, whilst new crop Nov 14 was GBP0.10/tonne lower at GBP148.90/tonne. Mar 14 Paris wheat closed EUR0.50/tonne lower at EUR198.25/tonne, Mar 14 Paris corn was EUR0.25/tonne lower at EUR174.00/tonne, whilst May 14 Paris rapeseed was EUR3.00/tonne higher at EUR393.00/tonne.

For the week, that puts old crop Mar 14 London wheat up GBP3.10/tonne, with new crop Nov 14 up GBP1.90/tonne. Mar 14 Paris wheat was down 25 euro cents on the week, with Mar 14 corn up EUR1.75/tonne and May 14 Paris rapeseed jumping EUR10.00/tonne.

FranceAgriMer cut their estimate for the French winter wheat crop rated good/very good from 75% last week to 74%. The proportion of winter barley rated good/very good was also trimmed by a point to 72%. French wheat and barley were both only rated as 66% good/very good this time a year ago however.

Crop development is also ahead of year ago levels, with FranceAgriMer saying that 90% of winter wheat is at the early tillering stage - ten points ahead of last year. Also, winter barley is 99% tillering versus 92% this time a year ago.

SovEcon said that this year's Russian grain crop was likely to be in the region of 86 MMT and not the 95 MMT opening gambit from the Ministry of Agriculture due to the lower winter grain planted area - 14.7 million hectares versus 15.8 million a year ago. The Ministry said though that an unusually high percentage (96%) of winter grains were in good to satisfactory condition.

The USDA's Outlook Forum meanwhile have this week released various acreage estimates for US wheat, corn and soybeans that all contradict the figures included in their baseline projections released last week.

To add further confusion, today's conclusion to the Forum, pegged US corn, soybean, wheat and cotton acres at a combined 238.5 million acres. That's exactly the same area as last year, yet that was a year that saw an unusually high number of "prevent plant" insurance claims due to early season wetness.

Meanwhile, despite the USDA forecasting 2014 all wheat plantings in the US down 700,000 acres on last year to 55.5 million, they see production higher than in 2013 due to lower abandonment levels.

Much closer to home, opinion is still divided as to exactly how much impact the wet weather and flooding will ultimately impact upon the UK wheat crop. It will surely be higher than last year, given the sharp increase in acreage alone, but what will quality be like? There are similar question marks over crops on the continent too.

Meanwhile, UK wheat imports might not be quite at the sort of runaway levels seen last season, but they aren't that far behind. We are also still struggling to export our very large 2013/14 barley surplus. Wheat demand from the bioethanol sector is almost certainly being overstated by Defra, and meanwhile corn continues to flood into the country.

UK ending stocks for both wheat and barley may therefore prove to be unusually high come the summer, particularly in such a low production wheat year.

It seems that we probably need to get some of the current level of market uncertainty out of the way, before we can gauge more accurately which way prices will go later in the year. May could be pivotal, just as it was 12 months ago.