Nogger's Blog

20/08/14 -- EU grains closed mostly lower, with London and Paris wheat again testing support at GBP120/tonne and EUR170/tonne respectively.

At the close of play Nov 14 London wheat was down GBP0.40/tonne to GBP120.70/tonne, Nov 14 Paris wheat ended EUR1.25/tonne lower at EUR171.25/tonne, Nov 14 Paris corn was down EUR1.00/tonne at EUR152.75/tonne, whilst Nov 14 Paris rapeseed was up EUR1.25/tonne at EUR320.75/tonne.

Confusion still reigns over the size and quality of the Ukraine grain crop. The PM now estimates this year's harvest at 55 MMT, down from last year's record 63 MMT. He threw a spanner in the works yesterday by saying that 15% of this year's grain crop would be lost due to the ongoing unrest.

His spokesman later said that what the PM meant was that 15% of the crops in the Donetsk and Lugansk regions would be lost. Last year's grain harvest in those two regions was 2.2 MMT and 1.3 MMT respectively. The Ministry of Agriculture today said that 2.1 MMT of grain had already been harvested in Donetsk, along with a further 904,600 MT in Lugansk.

The two totals combined would broadly agree with the PM's suggested 15% crop loss estimate, if we assume that pretty much nothing else gets harvested in these two areas. The bit that confuses me is that these aren't really big wheat areas, growing more corn, according to the USDA. The latter won't be ready to harvest yet anyway, fighting or no fighting, so how has Donetsk in particular already brought in a crop almost equal to that of last year?

If that isn't confusing enough, estimates as to how much of this year's Ukraine wheat crop is only of feed grade vary from 40% to as high as 70%. They've certainly been inactive on the international tender market of late, which suggests that they possibly don't really know the answer themselves yet. Reports now suggest that the Ukraine flour milling association has asked the government to temporarily halt exports of milling wheat until the quality of the crop can be better assessed.

Meanwhile Russia's harvest continues at a pace. Their Ag Ministry say that the country has produced 66.3 MMT off less than half of the planned area (46.4%). That includes 44.7 MMT of wheat off just over half (50.4%) of plan. Those figures suggest that a final grain harvest comfortably in excess of 100 MMT is on the cards, including well over 60 MMT of wheat.

Rusagrotrans today estimated Russia's August grain exports at 3.9-4.0 MMT, up from a previous forecast of 3.6 MMT and a record for any month ever, if achieved. July grain exports were also a record for that particular month, so they have certainly hit the ground running this season.

Belarus said that their grain harvest is almost over at 9.1 MMT, falling a little short of their Ag Ministry hopes for a record 10 MMT crop this year.

ADM Germany, formerly Toepfer International, estimated the 2014 wheat crop there at 26.04 MMT, up almost 6% on last year's production of 24.6 MMT. They forecast the German 2014 rapeseed crop at 6.08 MMT, a 5.5% rise on last year.

French growers are in the unusual position of having a large volume of feed wheat to sell this year. I hear in the market today that FOB offers for French feed wheat are comfortably undercutting the UK market at the equivalent of around GBP113/tonne FOB for Aug/Sep shipment. Ukraine new crop corn meanwhile is quoted at around GBP110/tonne FOB equivalent for Nov shipment.