EU Grains Fall As 'Big Crops Get Bigger'

Posted by Nogger - a legend in his own mind at 07:03 | Categorized as

18/09/14 -- EU grains closed mostly lower, as the old adage "big crops get bigger" continues to bite.

The day ended with Nov 14 London wheat down GBP0.75/tonne to GBP113.00/tonne, Nov 14 Paris wheat closed EUR2.50/tonne lower at EUR159.00/tonne, Nov 14 Paris corn was down EUR0.50/tonne to EUR139.75/tonne, whilst Nov 14 Paris rapeseed was EUR2.75/tonne easier at EUR323.00/tonne.

This was the first time Paris wheat has closed below EUR160/tonne since July 2010.

French analysts Strategie Grains estimated the EU soft wheat crop at 146.6 MMT, up 2.5 MMT from last month, and 8% higher than a year ago. They now put the EU all wheat crop at a record 153.8 MMT versus the USDA's current 151 MMT estimate.

In addition they placed the EU-28 corn crop at an also record 71.3 MMT, up 3.3 MMT on a month ago, and 11% higher than in 2013. This was based on "mostly good conditions at planting time and lack of drought-stress during this year's growth cycle," they said.

For good measure they also increased their outlook for the EU-28 2014 barley crop by 1.9 MMT to 59.6 MMT, a figure now barely changed from 59.7 MMT a year ago, when plantings were boosted by an unusually wet winter.

MDA CropCast joined the chorus of analysts forecasting higher grain production across the world in 2014, upping their estimate for Ukraine's wheat crop by 3 MMT to 23.6 MMT, with an increase also for barley (up 0.9 MMT to 8.7 MMT)

Russia said that its 2014 grain harvest had now reached 88.2 MMT off 72.2% of plan. That includes 53.2 MMT of wheat (off 72.7%), 19.5 MMT of barley (85.1%) and 2.8 MMT of corn (20.3%).

Rusagrotrans said the the country would export 3.8 MMT of grains this month, down from the record 4.66 MMT shipped out in August. They held steady on their 2014/15 grain export total at 32.5 MMT.

The Russian Ministry said that winter plantings for the 2015 grain harvest were already well advanced, at 8.4 million hectares, around 50% of the planned area, and comparing favourably with only 5.3 million ha a year ago at this time.

Customs data shows that the UK imported a rather large 194 TMT of wheat in July, the first month of the new marketing year. That's far more than the 12 TMT exported, and the 26th month in a row that imports have outstripped exports. That may be due to uncertainty over the quality of this year's crop back then, and monthly volumes will presumably decrease as the season progresses.

The pound was higher against both the US dollar and euro today as the chances of Scotland voting "yes" to exiting the Union seemingly diminished. The latest odds from the bookies tonight have a "no" vote at 1/5 favourite. The result is expected early on Friday morning.

Assuming that a "no" vote gets the nod then the pound could be firmer in the coming days. It already topped 1.27 against the euro today, it's best in more than a year. That would obviously be bearish for UK wheat export ambitions and could add a bit more downside to London wheat prices yet.

Defra today reported English wheat plantings for this year's harvest were up nearly 20% from last year at 1.8 million ha. Add on Scotland, Wales and Northern Ireland, and factor in the HGCA's current median forecast for yields at 8.5 MT/ha then we look like having a crop close to 17 MMT on our hands.