Nogger's Blog

14/08/14 -- EU grains trade mostly lower at midday, with Nov 14 London wheat down GBP0.35/tonne at GBP121.90/tonne, Nov 14 Paris wheat is EUR0.25/tonne easier at EUR171.00/tonne, Nov 14 Paris corn is down a euro at EUR153.00/tonne and Nov 14 Paris rapeseed is EUR1.75/tonne easier at EUR320.00/tonne.

The old adages "big crops get bigger" and "rain makes grain" are being well used at the moment, and with good reason. The USDA are now forecasting record world wheat, corn and soybean production in 2014/15.

The Russian grain crop isn't just ticking up either, if Tuesday's 6 MMT hike in wheat production and 2 MMT rise in barley output are anything to go by.

The USDA now have this year's Russian wheat crop at 59 MMT, and are forecasting that the country will also produce 18.5 MMT of barley in 2014. The question now regarding Russia is "is that it, or are there more rises to come?"

If we accept the bare numbers coming through from the Russian Ministry then it looks like these figures could still be too low. They say that the country's 2014 grain harvest now stands at 61.1 MMT off little more than 40% of the planned area, with yields currently averaging 3.19 MT/ha, which is 20% more than this time a year ago.

Whilst the harvest is well advanced in the south and central areas, it is only just getting going in Siberia and the Urals. These are less productive regions, and will bring the national average yield figure down as the harvest progresses, but these areas should still be able to produce a 2 MT/ha average.

Wheat accounts for 43.6 MMT of this year's Russian grain harvest so far, off 12.2 million hectares, according to Ministry estimates. The USDA estimate the Russian wheat harvested area at 23.75 million hectares this year. That leaves 11.55 million hectares still to harvest. If that area only produces a yield of 2 MT/ha then we'd potentially be looking at a Russian wheat crop of 66.7 MMT in bunker weight this year.

That could be one of the reasons why Russian grain exports hit 3.12 MMT in July, a record for that particular month, and are seen rising to around 3.6 MMT in August.

Switching back to Europe, French analysts Strategie Grains today hiked their forecast for the EU-28 soft wheat crop by 3.7 MMT from just a month ago due to better than anticipated yields which they described as being "exceptional in many countries".

That takes production up to 144.1 MMT, a 6% rise on a year ago. With an anticipated durum wheat crop of a further 7.2 MMT to add to that, EU-28 all wheat production will now come in at 151.3 MMT this year if Strategie Grains are correct, which would beat the 2008 record year by around 200 TMT (although European data now includes Croatia). This is also significantly higher than the USDA's forecast of 147.9 MMT from just a few days ago.

They did however caution on quality, cutting the percentage of the wheat crop rated as being suitable for milling down from the 67% forecast last month to 59%, and a sharp reduction on 71% this time last year. These problems are particularly manifest in France, for whom they cut projected wheat exports in 2014/15 by almost 3 MMT.

The French Analysts also increased the size of the EU-28 barley crop by 1.4 MMT from last month to 57.7 MMT (versus 56.2 MMT from the USDA) and upped their corn estimate by 1.6 MMT to 68 MMT (versus 67 MMT from the USDA).

Meanwhile Germany's farm co-operatives association DRV raised their estimate for the 2014 grain crop there to 50.1 MMT, versus 47.8 MMT last year and 45.6 MMT for the 5-year average. They also see OSR production rising this year from 5.8 MMT to 6.1 MMT.

They estimated the German 2014 winter wheat crop at 26 MMT, up 5.4% on last year, with winter barley production rising 10% to 9.2 MMT, and corn output up 13.7% to nearly 5 MMT due to significantly higher yield potential. They said that the quality of this year's wheat crop was "average to good" although proteins are lower than last year.

Elsewhere, the Czech Stats Office raised their estimate for the 2014 cereal crop there from 6.65 MMT to 7.06 MMT, up 3.5% on last year's 6.82 MMT and 4.4% above the 10-year average. Wheat will account for 4.74 MMT of that total, they said.