EU Wheat Markets End Close To 4-Year Lows

Posted by Nogger - a legend in his own mind at 08:50 | Categorized as

12/08/14 -- EU grains closed mostly lower, with London wheat ending the day within 5 pence of the recent 4-year closing low of GBP122/tonne. Paris wheat finished within sight of it's own recent 4-year lowest close of EUR170.50/tonne too. A close below long-term support at GBP120/tonne and EUR170/tonne respectively would signal more downside to come yet.

At the close of play Nov 14 London wheat was down GBP1.15/tonne at GBP122.05/tonne, Nov 14 Paris wheat ended EUR0.25/tonne lower at EUR172.00/tonne, Nov 14 Paris corn fell EUR0.50/tonne at EUR154.00/tonne, whilst Nov 14 Paris rapeseed was down EUR2.50/tonne at EUR322.25/tonne.

Rain makes grain is the old adage, even if it sometimes only makes for lots of low quality grain (just as it did here in 2008 when the harvest dragged on into October and we produced our highest wheat crop ever). The French Farm Ministry today increased their forecast for the 2014 domestic soft wheat crop from 36.5 MMT to 37.3 MMT, a 1.2% rise on last year.

The Ministry also raised their outlook for this year's French barley crop from 11.3 MMT to 11.65 MMT, up 12.9% versus 2013, and increased their French OSR production estimate from 5.2 MMT to 5.5 MMT, a 26.6% hike on a year ago. In addition they forecast the French 2014 corn crop (their first estimate of the year) at 15.1 MMT, a 2.5% rise versus 2013 despite a fall in plantings, with yields up 8.1% to 9.07 MT/ha this year.

Separately, FranceAgriMer largely concurred, estimating the 2014 French soft wheat crop at "above 37 MMT" versus an original forecast of 36.7 MMT a month ago. They estimated yields at 7.5 MT/ha, up 0.1 MT/ha on last year and 0.2 MT/ha above the 5-year average. They see barley production at 11.4 MMT this year, and agree with the Ministry's forecast of 5.5 MMT for the 2014 French OSR crop.

Elsewhere the Romanian Ag Ministry raised their forecast for the 2014 corn crop there by 6.7% to 9.8 MMT. The Hungarian Ministry estimated corn production there at 8 MMT versus 6.73 MMT a year ago.

Bulgaria said that it's rain delayed 2014 wheat harvest stood at 4.5 MMT off 89% of the planned area, and that despite the rain the barley harvest was almost over at 98.5% complete, producing a crop of just under 800 TMT to date.

Customs data shows that the UK imported 225 TMT of wheat in June, a 9-month high, taking the 2013/14 seasonal total to 2.21 MMT.That's still historically high even if it is down versus the 2.96 MMT imported in the previous marketing year. Corn imports in June were 118 TMT, taking the 2013/14 total to 2.39 MMT, a 41.4% increase on the prior 12 months.

Late in the day the USDA raised their forecast for the world 2014/15 wheat crop by almost 11 MMT to a record 716 MMT, taking ending stocks up from the 189.54 MMT estimated in July to almost 193 MMT.

Production in Russia was hiked from 53 MMT to 59 MMT and Ukraine was raised from 21 MMT to 22 MMT. "The Russia and Ukraine increases are based on harvest reports that indicate very high winter wheat yields, especially for Russia," they said.

In Europe they saw wheat production essentially unchanged, but increased feed usage from 54.4 MMT to 57 MMT as "excessive harvest-time precipitation in several European production regions has increased the quantity of feed-quality wheat." They increased the outlook for this year's EU-28 corn harvest from 65.64 to 67.05 MMT.