EU Grains Take A Pasting, Led By Old Crop London Wheat
14/05/14 -- EU grains took a bit of a pasting today, with old crop London wheat coming off particularly badly, as corn continues to flood into the UK. The outlook for a bumper (and early) European harvest is also grabbing traders attention.
May 14 London wheat ended down GBP3.60/tonne at GBP153.40/tonne, and new crop Nov 14 London wheat closed GBP2.50/tonne lower at GBP150.00/tonne. Nov 14 Paris wheat closed EUR2.5/tonne easier at EUR201.00/tonne, Jun 14 Paris corn fell EUR2.75/tonne to EUR180.50/tonne and Aug 14 Paris rapeseed was down EUR1.50/tonne to EUR361.25/tonne.
And so, for all the talk of tightness in the old crop, the Jul/Nov spread on London wheat continues to erode to next to nothing - much as it did 12 months ago - standing at just GBP2.70/tonne tonight.
We thought that 2012/13 was a big year for UK corn imports. UK customs data showed that we imported a whopping 309 TMT of corn in March, taking the season to date (Jul/Mar) total to 1.92 MMT, fully 50% up on year ago levels. Wheat imports are also on the up, with those in March coming in 54% higher than in February at 126 TMT.
In contrast, UK wheat exports were a miserly 25 TMT in March, taking the 2013/14 campaign total to just 353 TMT. That's only around 60% of the total shipped out during the same period in 2012/13 - and that was hardly a vintage year in the export scrapbook.
Agrimoney said that this was the 22nd month in a row that UK wheat imports had outstripped exports as "shipments continued to feel the hangover from 2012, the second wettest year on record for the country."
UK crop production prospects continue to look excellent on the current mix of sunshine and showers. A bout of a warmer few days ahead with plenty of sunshine, will bring crop development along nicely.
The French Farm Ministry estimated wheat plantings there at a little over 5 million hectares, down 0.5% on last year, but 1.1% above the 5-year average. The barley area this year is seen at just under 1.7 million ha, a 2.8% rise versus 2013 and 1.1% above the 5-year average. Corn plantings are forecast down 4.9% to just under 1.8 million ha, although that's still 3.2% above the recent mean. OSR plantings are seen at a little over 1.5 million ha, a 6.5% rise versus last year and 1.5% above the 5-year norm.
FranceAgriMer estimated French 2013/14 soft wheat ending stocks at 3.075 MMT, a rise of 5.5% versus 12 months previously. They see corn ending stocks at 2.979 MMT, a hike of 20.6% compared to 2012/13 carryout. Barley stocks of 1.58 MMT represent a 25.8% jump on a year ago.
Ukraine said that they'd exported a record 30.4 MMT of grains so far this season, including 19.1 MMT of corn (already an all-time high), 8.6 MMT of wheat and 2.3 MMT of barley.
Winter crop conditions in Ukraine are said to largely be very good, and progress with spring plantings has been brisk, if slowed down a little by recent rains. The latter can only ultimately be good for germination.
Lower yields versus 2013 are still thought to be likely in Ukraine however due to reduced inputs. The USDA currently peg wheat yields there at 3.17 MT/ha, down 6.5%, and corn yields 15.4% lower at 5.42 MT/ha - albeit from the record levels achieved in 2013.
A Reuters poll pegged the Ukraine corn crop at an average estimate of 25 MMT, a second highest ever, but down versus last season's record 30.9 MMT. The USDA said 26 MMT on Friday. Note though that old crop corn carryover from 2013/14 is expected to be at record levels of 3.24 MMT according to the USDA, boosting total availability in 2014/15 into the 28-29 MMT region. Much of that will probably end up finding its way to Europe, where 2014/15 corn imports are expected to match the record levels of this season.
