EU Wheat Higher On Ukraine Tensions, Although Prices Still Down On The Week
15/08/14 -- EU grains closed mostly higher, although rapeseed finished in the red, on an uptick in tensions between Ukraine and Russia.
At the close of play Nov 14 London wheat was up GBP1.30/tonne to GBP123.10/tonne, Nov 14 Paris wheat ended EUR3.00/tonne higher at EUR173.75/tonne, Nov 14 Paris corn was up EUR1.00/tonne at EUR154.50/tonne, whilst Nov 14 Paris rapeseed was down EUR0.75/tonne at EUR321.75/tonne.
For the week that still puts London wheat GBP0.70/tonne lower however, with Paris wheat down EUR0.50/tonne, corn unchanged and rapeseed falling EUR6.25/tonne.
London and Paris wheat are so far just about managing to hold above support at GBP120/tonne and EUR170/tonne respectively, although both have had the odd little wobble below those levels in recent days.
The developing situation in Ukraine continues to turn this way and that. The implications for the grain market remain unclear. The nearby market remains depressed, the Black Sea region is where the cheap offers are, although there's always the possibility that buyers will shy away from committing to purchases that they may not ultimately get if the situation in the region escalates further. There's always the possibility of an "anti-Russian" stance from some international buyers, although money talks at the end of the day.
The currencies of both countries are weak on the back of the crisis. Credit is tight and farmers need to sell to pay their bills and fund their planting programmes for 2015. Interest rates in the region are also rising.
The combination of all of those factors means that there are plenty of local forced sellers, despite low world prices. At least the weak hryvna and rouble mean that farmers are getting a bit more in their local currency for their crops, although that factor will also be increasing the cost of imported inputs.
There could be more pressure to come if farmers are pushed into a similar situation with corn once they start harvesting that, although there's also some talk that the warm and dry weather that has sped the early grain harvest in the region may now be starting to hurt potential corn yields.
Russia said that they'd harvested 12.4 million hectares of wheat so far (versus 11.8 million this time last year), producing a crop of 44 MMT to date (versus 35.1 MMT in 2013) off just under 49% of the planned area. Yields are said to be up 19% at 3.55 MT/ha. Protein levels are said to be a bit lower than last year, although they are expected to improve as the harvest progresses north, even if yields here will drop. Talk of a 60 MMT or more Russian wheat crop this year is now widespread.
The Ukraine early grain harvest, which excludes corn, meanwhile is just about done. That's produced a wheat crop of 23.8 MMT along with 9.2 MMT of barley (both volumes in bunker weight), according to the Ag Ministry.
Russian 12.5% milling wheat was said to have traded at USD217/tonne FOB the Azov Sea for prompt shipment. That's the equivalent of around only GBP130/tonne. Ukraine new crop corn is said to be offered around USD183/tonne FOB the Black Sea, around GBP109.50/tonne.
In other news, Strategie Grains estimated yesterday that the EU-28 would produce 144.1 MMT of soft wheat this year, a 6% increase versus 2013. They said that only 59% of the crop would make milling standard, down from 71% a year ago.
The bare facts of that information, if correct, mean that EU-28 feed wheat supplies in 2014/15 will rise fully 50% compared with last year to 59.1 MMT. Milling wheat availability will drop nearly 12% to 85 MMT meanwhile.
That doesn't sound too friendly to feed wheat especially with a large EU-28 corn crop coming, regardless of whether Ukraine/Russian corn production estimates take a hit, once the harvest of the latter gets going.
Defra estimated the English wheat area for this year's harvest to be up 19% at 1.8 million hectares. They pegged the winter barley area at 366k ha, up 42% and the largest since 2003. Spring barley plantings were seen down 40% at 343k ha.
The HGCA said that the UK harvest was 45% done as of Aug 12, as the remnants of Hurricane Bertha slowed progress. Only around 320k ha was cut for the week through to that date, half the area harvested the week prior, they estimated.
"Yields continue to be above average for most crops, although where crops were waterlogged over the winter, established poorly or there were high weed and disease levels, yields have been reduced," they said.
The 2014 winter wheat harvest is now around 30% done nationally. In their first forecast of the season so far they estimated yields at 8.0-8.2 MT/ha, up around 5% versus the 10-year average and 9.5% above last year's 7.4 MT/ha. Bushel weights are averaging 77 kg/hl, with hagbergs and proteins in the milling wheats at 295 and 12% respectively, they added.
The UK winter barley harvest is almost over at 95% complete. Yields are much better than the 10-year average of 6.4 MT/ha at 7.2-7.4 MT/ha, a rise of 14%. Around 20% of the nation's spring barley crop had been cut as of Aug 12, with yields expected to average 5.9-6.1 MT/ha, up 11% on the 10-year average.
Virtually all (97%) of the UK's 2014 winter OSR harvest was now complete, with yields averaging 3.4-3.6 MT/ha, up around 6% versus the 10-year average of 3.3 MT/ha, they concluded.
