EU Grains End Lower On The Week, With Paris Wheat Down 5.5 Percent

07/11/14 -- EU grains closed mixed, but mostly lower on the day. Everything was lower for the week, although the losses sustained varied in magnitude, with London wheat faring the best, and Paris wheat the worst - at least on the front month which goes off the board on Monday.

At the close Nov 14 London wheat was down GBP0.50/tonne to GBP117.30/tonne, Nov 14 Paris wheat was EUR3.00/tonne lower at EUR162.75/tonne, Jan 15 Paris corn was up EUR0.75/tonne to EUR147.00/tonne, whilst Feb 15 Paris rapeseed fell EUR1.25/tonne to EUR334.50/tonne.

For the week, Nov 14 London wheat was down GBP1.20/tonne, or 1%, with expiring Nov 14 Paris wheat shedding EUR9.50/tonne, or 5.5%. Jan 15 Paris corn fell EUR4.50/tonne compared to last Friday, or 3% lower, whilst Feb 15 rapeseed was down EUR9.75/tonne, or 2.8%. The Jan 15 Paris wheat contract was down a more modest EUR3.25/tonne, or 1.9% for the week, for your interest.

European trade took the lead from US markets this week. For wheat in particular, US weekly export sales have disappointed of late, having been under 300 TMT for two of the last three weeks. Corn sales have also been poor at under 500 TMT for each of the last two weeks.

Some would point to this week's EU soft wheat export licence total of 517 TMT, down 29% from the previous week and 30% below the prior 4-week average as a sign that our exports too might be slowing following the recent price rise. However the cumulative total is still 9% above this time last year, and as we all know Europe exported a record volume of wheat in 2013/14, a total that we are not expected to match in 2014/15.

Certainly EU corn and barley exports are slow, with those for the former totalling only 958 TMT, a 37% decline versus a year ago, and those for the latter at 3.16 MMT representing a 29% fall compared to 2013/14.

Russia still remains pretty much priced out of the market, with the rouble hitting all-time lows against the euro and US dollar this week, farmers there are opting to sit on their remaining unsold inventory.

Their harvest is still ongoing, at 96.7% complete on 43.5 million hectares, producing a bunker weight grain crop of 108.6 MMT to date. Winter is now closing in, and bad weather is hampering the remains of the harvest, particularly in the Urals and Siberia.

This is also the case in Kazakhstan. The USDA's FAS in the country yesterday cut his wheat production estimate this year by 0.9 MMT to 13.0 MMT, forecasting 2014/15 exports (including flour) to fall 1.5 MMT to 6.0 MMT.

Things aren't said to be as bad in Ukraine, where the harvest has now reached 58.8 MMT off 94% of the anticipated area. That's better than the 54.8 MMT harvested this time a year ago, when production went on the be a record high. Corn accounts for 22.3 MMT of that this year's total, off 83% of plan.

The Ukraine Ministry said that the country had exported 12.55 MMT of grains so far this season, including 6.8 MMT of wheat, 3.3 MMT of barley and 2.3 MMT of corn.

The USDA's FAS office in Algeria forecast this year's wheat harvest at only 1.9 MMT versus 3.3 MMT a year ago following a prolonged drought. Consumption is seen rising 0.2 MMT to a little over 10 MMT, although imports are estimated to be unchanged at 7.5 MMT.

FranceAgriMer didn't release their regular Friday crop conditions and planting progress report today due to "technical problems".

Latest figures from the French Ministry showed the country's soft wheat exports to be down 6% in the first 3 months of the marketing year (Jul-Sep), with shipments to non-EU destinations down 27%, led by a particularly sharp fall in exports to Algeria, typically the leading home for French wheat, where sales are down by more than half.

French intra-EU wheat exports in the period were up 24%, presumably including a large rise in feed wheat sales - they were certainly undercutting UK feed wheat into "traditional" homes like Ireland during this period.

France also imported nearly 162,000 MT of wheat in Jul-Sep, more than double the volume purchased a year previously.

Iraq bought 200,000 MT of hard wheat from Canada and Australian wheat for Dec-Feb shipment in their tender. Turkey are shopping for 60,000 MT of optional origin durum wheat for Dec-Jan shipment.