New Lows For London Wheat On Abundant Supplies, Record Corn Crop Coming

26/09/14 -- EU grains closed mixed, with London wheat slumping to fresh more than 4-year lows on the abundant supply of feed wheat in Europe, combined with the arrival of the impending record large EU and world corn crop.

The day ended with Nov 14 London wheat down GBP1.40/tonne to GBP107.65/tonne, Nov 14 Paris wheat closed EUR1.25/tonne higher at EUR152.00/tonne, Nov 14 Paris corn was up EUR1.25/tonne to EUR137.25/tonne, whilst Nov 14 Paris rapeseed was EUR1.50/tonne easier at EUR315.50/tonne.

For the week that puts London wheat down GBP3.90/tonne, with Paris wheat falling a more modest EUR1.50/tonne. Corn was actually 25 euro cents higher and rapeseed fell EUR1.75/tonne.

A weaker euro this week also weighed on London wheat and supported the Paris grains a little.

Strong demand for milling wheat is evidenced by the fact that Brussels have so far this season issued soft wheat export licences for 6.4 MMT versus 6.2 MMT a year ago. Recall that the USDA currently expects EU wheat exports to fall more than 18% this year versus 2013/14. Note also that Europe has managed to achieve these sales in the face of very strong early season competition from the Black Sea, especially Russia. Their aggressiveness is expected to wane somewhat as the season progresses.

Russian wheat prices have fallen this week, in reaction to missing out on both of Egypt's tenders, with 12.5% milling wheat offers from the deep water Black Sea ports down to around $234/tonne, which is down $10/tonne versus a week ago.

The 2014 Russian grain harvest now stands at 94 MMT, off almost 79% of the planned area. Wheat accounts for 56.5 MMT of that total (off 80%) and barley a further 20.1 MMT (88%), according to the Ag Ministry. They also say that Russian growers have already seeded 10.6 million ha of land with winter crops for next year's harvest. That's 64% of the planned area, and a sharp rise on 7.4 million this time a year ago.

FranceAgriMer said that the French corn harvest is now underway, albeit at only 1% complete as of Monday. They left crop conditions unchanged (in a manner of speaking) at 86% good to very good, which is 30 points ahead of last season. The finer detail shows a shift of two points out of good into very good.

Corn crops all over Europe, including those here in the UK, continue to look splendid and hugely better than they did a year ago. ADM Germany, formerly Toepfer, estimated the EU-28 corn for grain crop at a record 70.46 MMT, a 9.3% rise on last year's 64.48 MMT. Some feel that it's the impending size of this crop that could prove to be the final nail in the coffin for feed wheat prices.

Ukraine corn prices are now said to be down to $160/tonne FOB the Black Sea (around GBP98.50/tonne), which is $10/tonne lower than a week ago. French corn values are said to be around EUR132/tonne FOB Bordeaux (around GBP103/tonne).

A duty free barley export quota which still has around 230,000 MT open on it, granted to Ukraine, which is scheduled to expire on Oct 31 will be extended until the end of the year, Brussels has said. Ukraine's duty free wheat and corn export quota to EU destinations has already been filled. There's talk that a new preferential quota could be granted to Ukraine for corn exports beginning Jan 1.

At home, the HGCA reported preliminary results for the quality of the 2014 UK milling wheat harvest at 11.3% protein, 77.3 kg/hl bushel weight and 311 hagberg. The average nitrogen content of barley is the lowest since records began in 1977 at 1.53%, they added.