EU Grains Attempt Modest Recovery Following Recent Rout
16/07/14 -- EU grains closed mostly higher for once, in consolidation/bargain hunting following the recent rout.
The day ended with new crop Nov 14 London wheat closing GBP0.45/tonne firmer at GBP129.25/tonne, Nov 14 Paris wheat was EUR2.00/tonne steadier at EUR179.00/tonne, Aug 14 Paris corn was up EUR0.50/tonne to EUR168.00/tonne and Aug 14 Paris rapeseed was EUR4.25/tonne easier at EUR325.75/tonne - another new 4 year low.
It's still far to premature to call this a recovery. The pound rose to it's highest levels against the euro in almost 2 years today, which will hinder the chance of any UK cereal exports in 2014/15. Despite the weaker euro, Paris wheat also remains anchored below key support at EUR180/tonne.
The Spanish Ag Ministry said that wheat production there (excluding durum) would only total 5.5 MMT this year. That's down from their previous estimate of 5.9 MMT and 18% lower than 6.7 MMT a year ago. The 2014 Spanish barley crop will only total 6.7 MMT versus 7.9 MMT previously and 10.1 MMT a year ago, they added.
On the flip side, Russia's Ag Ministry now estimate the 2014 grain crop there at over 100 MMT versus 92.4 MMT a year ago. Is this at least partly due to a bout of "my Dad is bigger than your Dad" bravado following the recent spat with Ukraine? SovEcon opt for a more modest 90 MMT, including 50 MMT of wheat and 12 MMT of corn - even if the latter is a record volume. APK Inform estimate the Russian grain crop at 93.6 MMT, of which 52 MMT will be wheat, 16 MMT barley and 11.8 MMT corn.
Rusagrotrans said that Russia will export 2.0-2.3 MMT of grains in July, up from a previous estimate of 1.8-2.0 MMT, but less than the 2.53 MMT exported in the same month in 2013. That's probably due to the Russian harvest being delayed by rain.
The Russians have harvested 22.2 MMT of grain so far versus 26.1 MMT a year ago, although average yields are reported to be up nearly 16% at 3.53 MT/ha by the Russian Ag Ministry.
Wheat now accounts for 18.5 MMT of that total, off 20.4% of the planned area, they say.
At home, the Farmers Weekly website said that the UK harvest was underway in the south west, where early yields and quality are "reasonably promising" for barley and OSR. The OSR harvest in Essex is already estimated to be 50% complete, with "rapid progress" being made. The wheat harvest in the county though is probably still 7-10 days away, they added.
UK customs data shows that we imported over 182 TMT of wheat in May, a seven month high, along with close to 200 TMT of corn. That takes the 2013/14 seasonal total to almost 2MMT of wheat and nearly 2.3 MMT of corn, beating Defra forecasts for both with one month's worth of figures still to come.
Falling world grain prices mean that the EU Commission have set the import duty on corn, rye and sorghum at EUR5.32/tonne versus zero previously. Currently 400 TMT of Ukraine corn is still allowed to be imported into the EU levy free (to Oct 31 of this year) under a beneficial agreement with Kiev.
Ukraine are also forecasting a second bumper crop production program in a row. Again, could there also be a political motivation behind this? Whether the answer is yes or no, for the time being at least this is driving local prices lower.
Agritel report that new crop Nov/Dec Ukraine corn is currently offered in the market at $183-188/tonne FOB the Black Sea (the UK equivalent of around GBP107-110/tonne), with prices having fallen $20/tonne in the past week. They also say that Ukraine 11.5% milling wheat is offered at $235-238/tonne, circa GBP138-139/tonne, with 12.5% milling wheat at $250/tonne which is around GBP146/tonne.
Reuters reported that Algeria's state grains agency has purchased 810,000 MT of milling wheat, likely from France, at $268-269.50/tonne C&F (circa GBP157/tonne including freight).
