EU Grains Set New 4-Year Lows

10/09/14 -- EU grains closed lower across the board, and at fresh 4-year lows on London and Paris wheat, along with Paris corn.

The day ended with Nov 14 London wheat down GBP1.05/tonne to GBP117.00/tonne, Nov 14 Paris wheat closed EUR2.00/tonne lower at EUR167.25/tonne, Nov 14 Paris corn was also down EUR2.00/tonne to EUR142.75/tonne, whilst Nov 14 Paris rapeseed was EUR0.75/tonne easier at EUR323.25/tonne.

The trade is bracing itself for what is expected to be a bearish USDA report tomorrow, which is expected to show record 2014/15 global production of wheat, corn and soybeans, with ending stocks of all three thought likely to rise again from a month ago.

Few are expecting anything bullish, even if the USDA's capacity to spring a surprise borders on the legendary. One or two are maybe hoping that the report might not be as bearish as anticipated, which could spark a rally.

Meanwhile there's a another huge corn crop on the way, not just in the US but also in Europe and the Black Sea.

French corn growers group AGPM forecast the crop there this year at a record 17.25 MMT, up 17% on last year's 14.73 MMT.

The French corn crop has been rated consistently highly all year, FranceAgriMer reported on Friday that 86% of the crop was in good to very good condition versus only 55% a year ago.

Today they said that only 46% of this year's French wheat crop has hagberg levels of 220 or higher, the standard demanded by the majority of the traditional North African export homes. Last year the proportion was 99%. Specific weights are also down this year to an average 76.3 kg/hl from 77.6 kg/hl in 2013. The average protein content in French wheat this year is said to be 11.1% versus 11.2% a year ago.

They also said that only 59% of this year's crop was rated of good to very good quality for bread-making as opposed to 95% a year ago.

This leaves France with an unusually large volume of feed wheat to sell this year, something which they have wasted little time in bringing to market, understandably considering that it now looks like there's a record corn crop almost ready to harvest.

FranceAgriMer said that total French wheat exports would fall 15.4% this season, with those to non-EU destinations seen down 34.5% to a seven year low of only 8 MMT, largely due to these quality issues.

Russia said that it had now harvested 83.6 MMT of its 2014 grain crop off only 66.8% of the planned area. The total includes 51.3 MMT of wheat, 18.8 MMT of barley and 1.9 MMT of corn.

Russia are said to be lining up a deal to export wheat to Iran in exchange for fruit, vegetables and oil following the recent introduction of EU and US sanctions against it. That could cut demand for German wheat which has made significant inroads to the Iranian market in the last 12 months since sanctions against them were eased.