Nogger's Blog

13/06/14 -- EU grains markets were mixed, although wheat was mostly lower again, with London wheat setting a new lowest close for a front month since July 2010, and new crop Nov 14 setting a fresh lifetime contract low of GBP136.75/tonne. The latter has now lost GBP25/tonne in the past two months, or more than 15% of its value.

The day ended with Jul 14 London wheat down GBP0.95/tonne at GBP138.75/tonne, and with new crop Nov 14 London wheat also GBP0.95/tonne lower at GBP137.00/tonne. Nov 14 Paris wheat ended EUR0.50/tonne lower at EUR187.25/tonne (a nine month low for a front month), Aug 14 Paris corn rose EUR0.25/tonne to EUR176.50/tonne, whilst Aug 14 Paris rapeseed increased EUR2.75/tonne to EUR351.25/tonne.

Losses for the week on old crop London wheat were GBP6.25/tonne, whilst the new crop fell GBP6.10/tonne. Paris wheat was down EUR5.75/tonne, corn was EUR2.00/tonne lower, whilst rapeseed managed a EUR7.00/tonne rise.

One of the reasons why wheat in London is coming off worse than in Paris is sterling strength - the pound closed above 1.25 against the euro tonight for the first time since November 2012. It's also very close to its best levels against the US dollar since October 2008, following last night's statement from BoE governor Mark Carney that a UK interest rate rise could be on the cards before the end of the year.

Another reason is talk that excess rains in parts of Eastern Europe, whilst boosting yields, may be cutting quality a little. Romania are expecting a wheat crop of around 8 MMT, a 0.5 MMT rise on production last year, but they could be in for a larger proportion of that being feed wheat rather than milling grade it is being suggested.

Nevertheless, new crop Romanian wheat was amongst the cheapest on offer in this week's Egyptian tender at $248.50 plus $10.25 freight. That's the equivalent in sterling of less than GBP152.50/tonne delivered. And bear in mind that this is for 12.5% milling wheat, taken from the farm to the docks, put on a boat and shipped to Egypt! Compared to that, the GBP130/tonne ex farm that one firm were offering for East Anglian feed wheat ex the combine at Cereals 2014 this week was more than generous.

The 2014 harvest in Ukraine is now underway in the Odessa region, where yields are not expected to match last year but still be above average. Very early reports say that the early grain harvest there is averaging yields of 2.59 MT/ha, down only modestly on 2.7 MT/ha this time last year.

There are also reports of some early harvest activity in the Adygea region of southern Russia, close to Kransnodar. I hesitate to report the yields that I have seen being reported as I cannot verify their accuracy. Let's just say that they are a lot higher than those being reported out of Ukraine.

Spring grain planting in Kazakhstan meanwhile is all but completed on 14.825 million hectares, or 99.3% of the Ministry's estimate.

French wheat is 100% headed, according to FranceAgriMer, which is 20 points higher than this time a year ago. French spring barley is a stunning 97% headed, up from 62% last week and compared to only 19% this time last year. They said that 77% of the French corn crop now has at least 6-8 leaves visible, versus only 32% a year ago.

The proportion of the French winter wheat crop rated good to very good fell 2 points on a week ago to 72%, although that's still better than 68% this time last year. Winter barley rated good/very good was down 3 points on last week to 68%, although again that's still ahead of 67% this time last year. Spring barley rated good to very good came in at 67% versus 69% last week and 71% a year ago. Corn was rated 88% good to very good, the same as last week and well ahead of only 58% this time last year.

Brussels reported that they'd issued 464 TMT of soft wheat exports this past week, taking the season to date total to 27.2 MMT, up 48% on a year ago. They also authorised 13.8 MMT worth of corn imports, taking the 2013/14 season total so far to 13.8 MMT.

For now though it's all about new crop, and the prospects for that look very good indeed. The trend remains lower.