Nogger's Blog

19/02/15 -- EU grains closed mostly higher. News that Egypt's GASC dismissed all offers in a tender to buy US wheat as too expensive, immediately re-tendering for a mixture of EU/US/Canadian/Australian and/or FSU origin wheat was supportive to the European market, with EU wheat having won a clean sweep in each of the last two such tenders.

At the finish, Mar 15 London wheat was up GBP1.05/tonne to GBP121.07/tonne; Mar 15 Paris wheat was EUR1.50/tonne higher at EUR187.50/tonne; Mar 15 Paris corn was EUR0.25/tonne firmer at EUR153.00/tonne; May 15 Paris rapeseed was also EUR0.25/tonne higher at EUR357.50/tonne.

After the markets closed, news emerged that the cheapest French wheat offer in the GASC tender was under $225/tonne, miles below the best US offer yesterday of $287/tonne, re-affirming the competitiveness of EU wheat. And these offers don't even take into account the extra cost of shipping wheat from the US.

Late in the day it was announced that Egypt in the end had bought 240 TMT of wheat, all of EU origin, split 180 TMT of French and 60 TMT from Romania.

Other supportive news came from Brussels, which released almost 900 TMT of soft wheat export licences this past week. That takes the season to date total to 19.9 MMT, a 3.1% advance on this time last year - which was of course a record pace.

Algeria said that it had bought 400 TMT of wheat for June shipment in a tender, with French origin the most likely victor. Jordan said that it had bought 100 TMT of optional origin feed barley for August shipment. Tunisia seeks 59,000 MT of optional origin durum wheat for March-April shipment.

The Russian Ag Ministry said that they might adjust the new export duty on wheat next month, depending on export data from February.

Agritel raised their forecast for Russian wheat exports in 2014/15 from 18 MMT to 19.5 MMT, lowering ending stocks by a corresponding amount to 10.32 MMT.

In Ukraine, they increased their barley export estimate from 3.5 MMT to 4.0 MMT, and raised their outlook on corn exports from 15.5 MMT to 17.5 MMT.

Oil World said that the EU exported 489 TMT of OSR to non-EU homes in the first half of 2014/15 (Jul-Dec), more than double the volume shipped out 12 months previously. The top home was Turkey taking 194 TMT, followed by Pakistan (142 TMT) and the UAE (86 TMT).

Back to Europe, prospects for wheat production this year are not as good as they were 12 months ago, say Martell Crop Projections:

"Europe produced a record large wheat harvest last season 155.9 MMT, but the new crop outlook is reduced due to erratic planting rains in the fall.

"Excellent wheat establishment in fall of 2013 contributed to the very productive wheat yields. Rainfall was rather evenly distributed across the vast wheat belt, encouraging favourable growth and development. Moderate temperatures further contributed to a productive crop, reducing evaporation and conserving ground moisture.

"By contrast, fall growing conditions this year were either too dry (northern Europe) or too wet (southern Europe) interfering with wheat establishment. Furthermore developing wheat was hampered by unseasonable heat, compared to 2013 when fall temperatures were moderate.

"A fall satellite vegetation image, obtained from the STAR Global Satellite Applications and Research, valid in late November, confirmed worse wheat conditions than the year earlier.

"If wheat is poorly established in the fall, the chances for a productive yield are much reduced. Based on this concept, the 2015 wheat harvest in Europe is expected to finish below last year's bumper crop," they conclude.