Nogger's Blog

25/06/14 -- EU grains closed mixed. Harvest pressure remains, with news that Germany is now cutting winter barley a couple of weeks earlier than normal.

The day ended with the erratic Jul 14 London wheat contract up GBP2.00/tonne at GBP139.50/tonne and with the more liquid new crop Nov 14 London wheat closing GBP0.25/tonne higher at GBP137.00/tonne. Trade in the long Nov 15 contract has picked up the past couple of weeks, possibly due to the premium it offers over the nearer by Nov 14 position. The former closed GBP1.75/tonne firmer at GBP144.00/tonne tonight.

Nov 14 Paris wheat closed a euro weaker at EUR185.50/tonne, Aug 14 Paris corn was down EUR1.25/tonne at EUR173.25/tonne and Aug 14 Paris rapeseed was EUR2.75/tonne firmer at EUR351.75/tonne.

Russia's Ag Ministry said the the country has already harvested more than 1.1 MMT of grains, with yields so far coming in at 3.85 MT/ha, an increase of 4.6% on 3.68 MT/ha a year ago.

Ukraine meanwhile has also harvested over 1 MMT of grains off 388k ha, with yields averaging 2.74 MT/ha, up 18% on 2.32 MT/ha at this early stage in 2013.

The Ukraine total includes 53 TMT of wheat and over 1 MMT of barley. They've also begun the 2014 rapeseed harvest

The trade is positioning itself ahead of Monday's upcoming quarterly grain stocks and 2014 planted area estimates from the USDA.

Even before the report is released, some are already questioning it's accuracy. "The ponding and localized flooding caused by the recent heavy rains is now casting a shadow over the June Planted Report which will be released on June 30th. The survey for the report was conducted in early June before the heavy rains moved into the northwestern Corn Belt. Therefore, any lost acreage caused by the saturated conditions probably will not be accounted for in the June report," said Dr Cordonnier.

Whether it's accurate or not, the trade will still trade these numbers on Monday.

As far as wheat is concerned, the 2014 US planted area is expected to be little changed from the 55.8 million acres estimated in March.

Before that we will have the Stats Canada 2014 planting estimates released on Friday, with a total wheat acres average estimate of 24.370 million expected versus the March estimate of 24.766 million.

The typically "El Nino" weather pattern of cool and wet US and Canadian conditions is giving rise to concerns over spring wheat production in both countries.

"Saskatchewan has been hit with very heavy rain receiving more than twice the average rainfall in the past month. Extremely wet conditions have developed in Alberta, east of Edmonton, and scattered areas of Manitoba. Wet field conditions are made worse by cool June temperatures. Spring planting in the Canadian prairies got off to a slow start, due to frozen field conditions following a harsh winter. Thus spring wheat, barley and canola development is running significantly behind schedule. June temperatures have been colder than normal in Saskatchewan, the top farm province, with recurring strong showers and persistent cloudiness," said Martell Crop Projections.

The HGCA say however that cooler July temperatures in the US Midwest frequently bring higher corn yields. "US maize crops have got off to a good start, but weather conditions as the crops pass through their reproduction stage (known as ‘silking’), in July, will be critical.

"Essentially, over the past ten years, as the temperature level has risen across the US Corn Belt in July, US maize yields have fallen," they said.

Martell Crop Projections would appear to concur: "The coolest July on record in 2009 did strongly influence corn production leading to a record high yield," they said.

The pound remains slightly off it's recent multi-year highs. Yet sterling has climbed from a three-year low of $1.48 early last July, around a week after new BOE governor Carney took office, to $1.70 in the last few days. That's a rise of nearly 15% on the outlook that they will be the first major central bank to raise global interest rates towards the end of the year.