EU Grains Mostly Lower As FSU Crop Estimates Rise

21/05/14 -- EU grains were mixed, but mostly a little lower, as yesterday's consolidation proved to be short-lived.

The day ended with May 14 London wheat closing down GBP0.05/tonne at GBP151.00/tonne, and new crop Nov 14 London wheat GBP1.15/tonne lower at GBP147.90/tonne. Nov 14 Paris wheat closed EUR1.00/tonne lower at EUR198.75/tonne, Jun 14 Paris corn was down EUR1.50/tonne at EUR175.50/tonne and Aug 14 Paris rapeseed ended the day unchanged at EUR358.25/tonne.

Fresh news was relatively lacking, and lower still seems to be the path of least resistance.

The Ukraine Farmers Club forecast grain production there this year at 60.0-61.5 MMT, that's down on last year's record 62.9 MMT output, but not a bad result at all considering that SovEcon yesterday increased their Russian grain production estimate by 2 MMT, thanks to the extra volume from the annexation of Crimea.

They estimated the Ukraine corn crop at 28.5-29.0 MMT versus 30.9 MMT last year, with wheat output little changed at 22.0-22.5 MMT and a barley crop of 8 MMT versus 7.6 MMT in 2013.

The Ukraine Ministry said that spring grain planting there is 90% complete at 7.52 million hectares, including 4.64 million ha of corn. They've also sown 4.23 million ha of sunflowers and 1.54 million ha of soybeans.

Russian spring grain plantings meanwhile are 68.3% done on 21.8 million hectares, which is 4.6 million ha more than at this time a year ago. That includes 7.4 million ha of wheat, 7.1 million ha of barley and 2.3 million ha of corn.

The pound rose to 1.69 against the US dollar, threatening to break through the 1.70 mark for the first time since October 2008. It also hit 1.2350 versus the euro, it's best since the first few days of 2013. Neither is good news for UK export prospects, demand for which is virtually non-existent in 2014/15. Yesterday's news that UK inflation had risen to 1.8% in April, from 1.6% in March, the first increase in 10 months, adds weight to market expectations for a domestic interest rate hike before too long.

Spain said that it had imported only 172.8 TMT of wheat in March, down 18% from February and 21% below the volume imported in March 2013. In contrast it imported 627.2 TMT of corn in March, nearly double the amount shipped in a year previously, echoing an EU-wide trend.

Iraq bought 150 TMT of Russian wheat for Sep/Oct shipment. They seem to be the most aggressive seller of new crop wheat around at the moment.

Rusagrotrans estimated Russia’s 2014 grain crop at 95-97 MMT versus 92.4 MMT in 2013. They estimated Russia’s 2014 grain exports at 27-28 MMT versus 25.3 MMT in 2013.

Big crops and the correspondingly aggressive export stance from the FSU nations is rarely good news for EU grain prices.

Egypt said that it had so far bought 2.75 MMT of new crop wheat on the domestic market, and that it expects to buy a total of 4.4 MMT this season.