Nogger's Blog

07/04/14 -- EU grains closed mostly higher, as tensions in Ukraine were increased following weekend developments that saw pro-Russian groups seize control of government buildings in the eastern city Donetsk declaring it a "people's republic". Similar moves are being reported from other cities in the east of the country such as Luhansk and Kharkiv.

May 14 London wheat closed GBP0.20/tonne higher at GBP163.65/tonne, and with new crop Nov 14 GBP1.60/tonne firmer at GBP153.55/tonne. May 14 Paris wheat closed up EUR0.75/tonne at EUR207.25/tonne, Jun 14 Paris corn was up EUR0.25/tonne to EUR184.50/tonne and May 14 Paris rapeseed was EUR2.25/tonne steadier at EUR411.00/tonne.

Despite the problems in eastern Ukraine, the agricultural industry currently appears largely unaffected - so far. The Ukraine Ministry said that early spring grain plantings had been completed on 2.44 million hectares, which is 89% of the anticipated area. That consists mainly of spring barley (1.86 million ha), with only a small area of spring wheat (151,000 ha) being sown. Planting of the 2014 corn crop is also just about underway, with 22,000 ha of the Ministry's forecast of 5.156 million ha so far in the ground.

The trade is pondering if it will be corn planting that will suffer the most from the current problems, with some suggesting that as much as 20% of the planned 5 million acres won't get sown at all. Tightness in the availability of credit in Ukraine could also have an adverse affect on farmers' ability to fund fertiliser and agrochemical inputs (as well as their supply), ultimately having a detrimental result on final yields of all crops this year.

For now, Informa are forecasting a Ukraine wheat crop of 20.5 MMT this year, down 8% on last year. They estimate that Ukraine will produce 26 MMT of corn in 2014, a near 16% fall on last year's record crop.

APK Inform said that Ukraine exported 619 TMT of grains via it's seaports last week versus 674 TMT the week previously. That's a very respectable total for this time of year. March exports were 2.74 MMT, a 6% rise on those in February. Most of that was corn (2.42 MMT), with a smaller volume of wheat (294 TMT) and other grains.

That beats the volume of grains exported by Russia last month, which was just over 2 MMT, including 1.3 MMT of wheat and almost 600 TMT of corn. Russia's 2013/14 marketing year to date grain exports are now up 47% on a year ago to 20.85 MMT. Wheat accounts for 15.4 MMT of that, along with 3.1 MMT of corn and 2.1 MMT of barley.

The USDA attache in Moscow estimated the 2014/15 wheat crop there at 52.0 MMT, almost identical to last year's 52.1 MMT. He estimated Russian wheat exports next season at 18.0 MMT versus 17.5 MMT in the current campaign. He also estimated the Russian 2014/15 barley crop at 16.0 MMT (up from 15.4 MMT in 2013/14) and corn production there at 11.0 MMT versus 11.6 MMT in 2013/14.

The USDA's FAS in Kazakhstan estimated the wheat crop there rising to 14.5 MMT this year from 13.9 MMT last year. Informa Economics are even more optimistic, forecasting output rising to 16.3 MMT.

The French government said that commercial grain stocks as at March 1 were 15.0 MMT versus 17.9 MMT a year previously. Soft wheat stocks were 6.8 MMT (versus 7.8 MMT a year ago), with corn stocks at 4.7 MMT (5.3 MMT) and barley stocks at 2.3 MMT (3.7 MMT). Exports of soft wheat (Jul/Feb) were 10.8 MMT versus 9.5 MMT twelve months previously. Barley exports were 3.3 MMT versus 3.1 MMT, and corn exports were 3.2 MMT against 3.5 MMT in the same period in 2012/13.

They said that 3.9 MMT of this season's French soft wheat exports had gone to other European destinations, which is very similar to 12 months ago (3.8 MMT). The top EU home was Belgium taking 899 TMT, followed by Holland with 852 TMT. The UK was the sixth largest destination for French wheat in the period, taking 303 TMT. Of the 3.2 MMT of corn exported by France in Jul/Feb, 2.9 MMT went to fellow EU buyers, with the UK taking 356 TMT of it.

Oil World forecast the EU-28 rapeseed crop up 1.9% at 21.4 MMT versus 21.0 MMT in 2013. They said that Germany would produce 5.7 MMT (versus 5.8 MMT last year), with French output up nearly 38% to 5.1 MMT (from 4.4 MMT) and the UK crop up 9% at 2.4 MMT (2.2 MMT). Informa estimated the EU-28 rapeseed crop a little lower at 21.1 MMT.

The USDA will pronounce on US winter wheat crop conditions tonight, in a resumption of it's regular weekly reports. The crop was rated 62% good/excellent on the last report of 2013 in late November. That is expected to have fallen to around 30-35% tonight.