EU Grains Mixed, Old Crop/New Crop London Wheat Spread Narrows

Posted by Nogger - a legend in his own mind at 19:06 | Categorized as

13/02/14 -- EU grains closed mostly higher, having traded lower for much of the day, after Chicago came in firmer in late afternoon business.

Mar 14 London wheat closed GBP0.45/tonne lower at GBP151.25/tonne, whilst new crop Nov 14 was GBP0.30/tonne firmer at GBP146.10/tonne. Mar 14 Paris wheat closed EUR0.75/tonne higher at EUR196.50/tonne, Mar 14 Paris corn was EUR0.75/tonne lower at EUR172.50/tonne, whilst May 14 Paris rapeseed rose EUR2.50/tonne to EUR369.00/tonne.

The old crop/new crop May/Nov 14 London wheat spread has now almost halved to GBP5.15/tonne versus nearly GBP10/tonne only a month ago. That might have something to do with UK flooding potentially reducing the size of the domestic 2014/15 crop, and/or a growing feeling that UK wheat and corn imports may well prove to be much higher this season than official estimates suggest.

Strategie Grains forecast the 2014/15 EU-28 soft wheat crop at 137.5 MMT, a 0.3 MMT drop on last month, although still 2% higher than last year. The downwards revision is due to reduced acreage in Estonia, Latvia, Lithuania, Poland and Ireland, they said. Even so, EU wheat plantings are still seen 800k hectares higher for the 2014 harvest at 24 million ha.

The French analysts forecast the EU-28 corn crop 0.3 MMT higher than last month at 65.1 MMT (up 1% on last year) due to increased plantings in Germany and Croatia, and better yields in France and Poland. The EU-28 barley crop was forecast 8% lower than last year at 55 MMT, although that's up 0.2 MMT on last month.

They said that EU-28 soft wheat exports will total 21.7 MMT in 2014/15, down more than 10% on this season's 24.3 MMT.

EU-28 corn imports in 2013/14 were estimated at 12.4 MMT versus a previous estimate of 10.8 MMT and 8.8% up on 2012/13 imports of 11.4 MMT. They said that corn use in animal feed is up 1.3 MMT from their previous estimate and up 3.4 MMT from 2012/13.

Talking of which, the latest UK import statistics released yesterday showed that we imported 389 TMT of corn in December, the largest volume ever on records going back to 1992, and up 74% versus 12 months ago. That takes 2013/14 corn imports so far (for the Jul/Dec period) to 1.13 MMT, an increase of 48% on a year previously.

The largest UK corn supplier is France with 343 TMT, followed by Bulgaria (260 TMT) and Ukraine (187 TMT). Defra only currently have the UK down to import 1.726 MMT of corn in the entire marketing year, meaning that we've already shipped in 65% of that total in the first half of the season - and note that imports picked up markedly in the first new crop months of November and December.

APK Inform said that Ukraine would export a record 31.7 MMT of grains and pulses this season, a 43% rise on a year ago. MDA CropCast raised their forecast for the 2013 Ukraine corn crop by 1.1 MMT to 30.1 MMT. Russian customs data showed that they exported 408 TMT of corn in January, a threefold increase on a year previously.

The pound rose above 1.66 versus the US dollar today, it hasn't spent a prolonged period at these levels since 2008. It was also up to 1.22 against the euro.