EU Grains Setting New Historic Lows Back In The Red

02/06/14 -- EU grains markets finished mostly back in the red to start the new month on post-harvest pressure.

The day ended with Jul 14 London wheat down GBP0.50/tonne at GBP146.50/tonne, and with new crop Nov 14 London wheat GBP1.15/tonne lower at GBP142.60/tonne. Nov 14 Paris wheat ended EUR1.00/tonne lower at EUR190.50/tonne, Jun 14 Paris corn slipped EUR1.75/tonne to EUR171.75/tonne, whilst Aug 14 Paris rapeseed fell EUR2.50/tonne to EUR348.00/tonne.

This was a new lowest close for a front month on London wheat since December 2011, the new crop Nov 14 also matched the lifetime contract low of GBP142/tonne at one point in intra-day trade. Paris wheat meanwhile closed within EUR0.50/tonne of the lowest front month close since last September, and a front month on Paris rapeseed has only closed lower than this once since July 2010.

Strategie Grains forecast the EU-28 rapeseed crop at 21.8 MMT, up 200 TMT from a month ago and similar to Oil World's record production estimate of 21.9 MMT from last week.

Contrary to expectations of a few months ago, Ukraine farmers appear to have just about planted almost all the originally forecast 2014 corn area. A mild winter and near ideal spring growing conditions also seem set to be offsetting the potential yield reductions from reduced applications of fertiliser and pesticides due to credit issues in the country.

Exports out of Ukraine appear to have slowed a little last week, with 185.5 TMT shipped out during the past week, according to APK Inform. That volume included 154.5 TMT of corn and 25 TMT of wheat. The 2013/14 year to date exports are 31.4 MMT, a 42% rise on a year ago. That includes around 20 MMT of corn, 9 MMT of wheat and 2.3 MMT of barley. The Ag Ministry forecast full season exports at 32 MMT.

They will be harvesting barley, wheat and rapeseed in Ukraine just a few weeks from now, and the tightness of credit, slumping local currency and lack of on-farm storage all look set to force grower's hands there into being "distressed" sellers straight off the combine.

The Kazakhstan’s Ag Ministry said that the country exported 8.21 MMT of grain between July 1st – May 30th, up 27% versus 6.46 MMT a year ago. Spring grains there have been planted on 11.5 million hectares, or 74% of plan, they added.

Russian spring grain planting is also well advanced, with 11.4 million acres of spring wheat now sown (87% of plan), which is 1.9 million ha more than at this time last year. Spring barley has been sown on 7.9 million ha (90% of plan), which is 700k ha more than this time in 2013. They've also almost completed corn planting, which is 96% done on 2.5 million ha.

Russian exports for the season so far currently stand at 17.8 MMT of wheat, 3.8 MMT of corn and 2.4 MMT of barley.

Algeria bought 700 TMT of optional origin milling wheat for August shipment at $274-275/tonne C&F, which is the equivalent of around GBP164/tonne including freight. French material is thought to be the most likely origin. They also bought 200-250 TMT of durum wheat for Aug/Sep shipment.

Jordan are tendering for 100 TMT of hard milling wheat for Oct/Nov shipment along with a similar volume of barley. Pakistan bought 100,000 MT of wheat from the Black Sea region for Aug/Sept shipment, along with 45,000 MT of rapeseed of a similar origin for September.