Nogger's Blog

23/10/14 -- EU grains closed mixed, but mostly higher. Front month Nov 14 Paris wheat closed at a EUR0.75/tonne premium to the Jan 15 contract. A week ago, and the day before margin calls on short positions in it were doubled, it was at a discount of EUR4.50/tonne. As contract expiry draws nearer (on Nov 10) we can expect to see further erratic behaviour from the front month.

The day ended with Nov 14 London wheat up GBP1.00/tonne to GBP120.00/tonne, Nov 14 Paris wheat closed EUR2.50/tonne firmer at EUR170.25/tonne, Nov 14 Paris corn was up EUR2.75/tonne to EUR145.75/tonne, whilst Nov 14 Paris rapeseed was EUR0.50/tonne higher at EUR323.75/tonne.

Following much criticism, Euronext announced today that its milling wheat futures benchmark will adopt new specifications taking effect with the September 2017 contract month. The new fixed specification will be a minimum of 11% protein (on a dry matter basis), hagberg falling numbers of a minimum 220 and a minimum bushel weight of 76kg/hl.

"Euronext also welcomes the decision that the accredited delivery silo operated by Socomac will adopt exactly the same 2014 protein content and Hagberg falling number requirements in its General Terms & Conditions as Sénalia for wheat for the 2015 and 2016 crop years," they also said.

The Ukraine Ag Ministry forecast winter grain plantings at 7.5 million hectares, including 6.2 million ha of wheat. They said that planting of the latter is now 96% complete.

APK Inform estimated that around 5% of crops in the troubled Donetsk region of Ukraine will go unharvested, along with around 25% of the area around Lugansk. In total that equates to production of around 530 TMT, they said. They also figure that around 25-30% of the sunflower crops in these areas will remain unharvested, the equivalent of around a further 3-400 TMT.

Rusagrotrans forecast Russia's October grain exports at 3.5-3.6 MMT, up from a previous estimate of 3.3-3.4 MMT, and a record for the month. They said that Russia had already shipped 1.78 MMT of grains in the first half of the month, of which 72% was wheat, 18% barley and 9% corn.

Whilst winter grain planting in Russia is nearing completion, concerns remain that earlier dryness means that crops are under-developed heading into winter dormancy. A sharp cold snap over the next few days, with temperatures forecast to dip as low as 20-25 F even in southern parts of the country, could cause some damage. "Crops have not yet reached the stage of development in which they can face these temperatures easily," said Agritel.

MDA CropCast raised their forecast for the EU wheat crop by 2.5 MMT from last week, also upping corn production here by 2.1 MMT and increasing their outlook on European barley output by a similar amount. They also forecast increases for Russian barley (+2.9 MMT) and corn (+0.7 MMT), along with a smaller rise in wheat (+0.6 MMT) and barley (+0.4 MMT) in Ukraine.

They seemed relatively unmoved by suggestions that all is not well with the Australian wheat crop, leaving their production estimate unchanged from a week ago at 24.04 MMT. Widespread rains in WA have slowed wheat drydown somewhat, they said. Meanwhile drier weather elsewhere in the country has been favourable for crop maturation, they added.

With the US harvest running late, Societe General said that there could still be time for "one last leg down in corn prices" if and when the pace picks up. Any downside would however be short-lived, citing strong demand and reduced plantings in South America, they said.

Good yield reports coming from the French harvest could eventually boost corn production there past the 17 MMT mark, it is thought. That would be a record harvest for them, further stretching logistics and storage capacity already weighed down by the large and varied quality of the 2014 wheat crop and sluggish exports.