EU Grains Mixed As Traders Digest USDA Report In Detail

Posted by Nogger - a legend in his own mind at 18:50 | Categorized as

11/02/14 -- EU grains were mixed at the end of a choppy session in which traders had a bit more time available to them to take stock of the detail contained within yesterday's USDA WASDE report.

Mar 14 London wheat ended unchanged at GBP153.50/tonne, whilst new crop Nov 14 gained GBP0.45/tonne to GBP146.60/tonne. Mar 14 Paris wheat was up EUR1.00/tonne to EUR195.75/tonne, Mar 14 Paris corn was EUR1.25/tonne lower at EUR173.50/tonne, whilst May 14 Paris rapeseed fell EUR0.50/tonne gain to EUR373.50/tonne.

In among the minutiae of yesterday's USDA report was a 1.5 MMT hike in 2013/14 EU-28 wheat exports to a record 27.5 MMT, a 21.6% increase on last season. Brussels have already granted export licences for 70% of that total (including durum and wheat flour). Wheat feeding in Europe was lowered by 1 MMT, whilst corn usage was increased by 2 MMT.

Other areas of note, also included a 1 MMT drop in Argentina's wheat export potential to just 3 MMT, and a 1.5 MMT reduction in Kazkhstan's wheat exports this year. The latter was due to sharply lower yields (and therefore production) than previously estimated. Note though that Kazakhstan's central bank devalued the local currency, the tenge, by 19% overnight which may actually boost exports.

Australia's ABARES said that the 2013/14 wheat crop there was just over 27 MMT, up 800 TMT from their December forecast. This would be their 3rd highest production on record, and is 500 TMT more than the USDA said last night. They also said that the barley crop was 9.5 MMT, a 900 TMT hike on their previous estimate, the second largest on record and 400 TMT above the latest USDA figure.

Western Australia state produced a bumper 10.5 MMT wheat crop this season, they added. That's a 58% increase on last year. Australian canola production was increased from the 3.4 MMT forecast previously to 3.55 MMT.

Russia only manged to pick up 2,430 MT of grain in today's intervention purchase - the lowest volume bought so far - and all of it was feed barley. Current bid prices are generally considered too low after the recent decline in the value of the Russian rouble, and exports potentially offer more attractive returns.

Warmer temperatures mean that much of the protective snow cover in Ukraine and Southern Russia has melted away, but winterkill doesn't appear to be an issue yet. For now winter grains are generally rated 92-95% good/satisfactory in the region.

The Ukraine Ag Ministry said that Ukraine has exported 1.06 MMT of grain so far this month. They placed Feb exports at 2.4 MMT versus 2.79 MMT in January.

It looks like global wheat plantings for the 2014 harvest are/will be higher. The International Grains Council (IGC) today estimated that the world will harvest 224.2 million hectares of wheat this year, an increase of 5.5 million ha, or 2.5%, versus 2013.

India will begin harvesting a record 31.5 million hectares of wheat next month, and are expecting an all-time high crop that could reach 100 MMT. China will also harvest a record wheat area of 24.3 million hectares this year, according to the IGC.

Meanwhile the US will harvest 19.4 million hectares of wheat in 2014, a rise of 1.1 million ha despite a 3% drop in plantings due to lower abandonment rates, they said. The EU will harvest 26.1 million hectares of wheat, an increase of 0.4 million ha, essentially due to a return to a “normal” area of around 2 million ha here in the UK, they add.