Nogger's Blog

02/09/14 -- EU grains closed with little change, in what felt like a repeat performance of yesterday's trade. You would have been forgiven for thinking that US markets were closed again today, let's just say that they were slow to wake up.

The day ended with Nov 14 London wheat down GBP0.55//tonne to GBP121.00/tonne, Nov 14 Paris wheat ended EUR0.25/tonne weaker at EUR173.50/tonne, Nov 14 Paris corn was down EUR0.50/tonne at EUR151.25/tonne, whilst Nov 14 Paris rapeseed was EUR3.00/tonne firmer at EUR326.50/tonne.

Fresh news was relatively thin on the ground. The Russian Ag Ministry said that they'd harvested 26.6 million hectares, or 57.1% of the planted area, producing 75.3 MMT of grain so far. That's up from 62.3 MMT this time last year, with yields averaging 2.83 MT/ha, a 19.4% increase compared to 2013.

Wheat accounts for 47.9 MMT of that total, off 14.7 million ha, which is 57.9% of the planted area. The 2014 Russian barley harvest meanwhile is now 72.8% complete, producing a crop of 17.3 MMT so far.

In addition, the corn harvest is just getting going, with 75k ha cut thus far (2.7% of the planned area), producing 410 TMT to date.

Meanwhile the planting campaign for winter crops for the 2015 harvest is underway in Russia, with 2.5 million ha already sown. That's a little over 15% of the Ag Ministry's intended target.

The 2014 corn harvest in Ukraine is also spluttering into life, with one or two new crop parcels being offered onto the export market for prompt shipment.

The Ag Ministry there are currently forecasting winter plantings at 7.5 million ha, a 4% decline on last year (which of course then included Crimea). They say that plantings have been delayed by rain, and that there is currently little in the forecast for the next two weeks.

It remains to be seen if Ukraine growers get even close to that planting target given the weather, tightness of credit, the weak currency and political turmoil in the region. Not to mention who wants to plant in a war zone?

At home, the promised spell of fine and dry weather appears to have arrived bang on cue with the kids going back to school. That should allow further good progress to be made wrapping up the last of the wheat harvest this week in a very timely manner as well as getting some fieldwork done with regards to our own winter planting.

What those winter planting intentions will be is unclear, with growers generally unhappy with the price of everything at the moment. Overall though I don't see the final winter wheat area being that much different to "normal" at this early stage. We've planted around 1.8-2.0 million hectares of winter wheat every year bar two (when the weather badly intervened) out of the last 20, so I don't really see too much deviation from this again this year, especially in the absence of another viable alternative screaming "plant me!"

Indeed, the unusually large premium (+12%) that currently exists on the Nov 15 future over the Nov 14 contract does offer some encouragement to plant wheat, even if I suspect few growers will fancy selling some of their 2015 production short before the crop is in the ground whilst they're still long (heavily in some cases) of 2014. Note too that Chicago (+10%) and Paris (+8%) wheat futures are also offering healthy premiums for next year's crop over this year's.