EU Grains End Lower As Falling Crude Oil Prices Weigh On Market
13/03/15 -- EU grains closed mostly lower on the day, but higher for the week. A general commodity slump today didn't help the cause, with crude tumbling below $45/barrel in the US for a loss of almost 10% on the week.
It was a bit of a "Friday the Thirteenth" day, with most of the board painted red, save for the odd exception here and there, and any dollar-led exchange rates.
The day ended with Mar 15 London wheat down GBP0.95/tonne at GBP117.80/tonne, May 15 Paris wheat clawed its way EUR0.25/tonne higher to EUR190.25/tonne, Jun 15 Paris corn fell EUR0.75/tonne to EUR164.25/tonne and May 15 Paris rapeseed was up EUR0.75/tonne at EUR369.00/tonne.
For the week though, London wheat still posted a net gain on GBP1.55/tonne, whilst Paris wheat added an impressive EUR9.25/tonne. Paris corn finished the week EUR5.25/tonne higher than it began it and Paris rapeseed rose EUR6.50/tonne versus last Friday.
The weak euro/strong US dollar combination is clearly an aid for EU exports, as backed up by yesterday's weekly soft wheat export licence total being the second highest ever. Falling crude oil prices remain a worry though.
The US Energy Dept said that any appearance of stability in the world oil market has it's foundations built on shaky ground.
“Behind the facade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly,” they said.
That isn't likely to help the struggling UK and EU bioethanol industries one jot. It will also hurt the revenue of oil exporting nations, thereby reducing the ability to fund wheat imports of some nations heavily reliant on crude sales to boost their income.
Whilst EU-28 grain production is seen lower this year, the large carryover stocks left over from the current season, look set to further boost ending stocks in 2015/16.
Strategie Grains forecast the EU-28 2015/16 soft wheat crop at 140.4 MMT, down 5.6% from last year. Production in France is seen virtually unchanged at 37.4 MMT, but output will fall 6.5% in Germany to 25.9 MMT, it will decline 9.6% in the UK to 15.0 MMT and drop 8.6% in Poland to 10.6 MMT, they estimate.
They still predicted ending stocks at a 10-year high yesterday though.
For barley, the French analysts see the EU-28 crop down 3.8% at 58.1 MMT this year, with the French crop dropping 1.7% to 11.5 MMT and output in the UK down 4.3% to 6.6 MMT.
The EU-28 corn crop will fall 9.3% to 68.2 MMT this year, they predict. Output in France will tumble 13.4% to 15.5 MMT, with Hungary down 14% to 8.0 MMT and Romania down 12.4% to 9.9 MMT, they say.
Origin Enterprises meanwhile estimate to UK winter wheat area virtually unchanged this year at 1.95 million hectares. That compares to the HGCA's figure of a 7% decline in England and Wales to 1.69 million ha. The Scottish winter wheat area last year was a little over 100k ha, so a similar area this year would probably have the HGCA lining up around 1.8 million ha for the UK as a whole.
Origin are also at odds with the HGCA in their forecast for the UK winter OSR area, which they see down 10% year-on-year at 620k ha. The HGCA forecast the combined area of England and Wales alone at more than that (633k ha) - although that does include any spring plantings too. For reference, the Sottish OSR area last year was a little over 40k ha.
The latest customs data from the HMR&C shows that the UK only exported 137 TMT of wheat in January, down from 225 TMT in December. Cumulative exports are now at 1.08 MMT this season - a not particularly impressive total. This is the lowest figure in recent years when the UK has been a net exporter (ie excluding the last two), say the HGCA.
The pace of UK wheat imports meanwhile, at 111 TMT in January, whilst down from December's total is still "surprising in the context of the sizeable UK crop this year," the HGCA add.
In other news, Russia's spring planting campaign has been completed on 200k ha, or 0.4% of the government's target for the year. Ukraine's spring planting has been completed on 155k ha, or 6% of the government forecast for 2015.
FranceAgriMer estimated French winter wheat crop conditions unchanged on a week ago at an impressive 91% good to very good, up sharply from 75% a year ago. French winter barley ratings rose one point in the good to very good category to 91% versus 73% a year ago.
They said that the French spring barley crop is 46% sown, up from 24% a week ago and versus only 17% this time last year.
Crop conditions might be good, but maturity is lagging 12 months ago at this stage. The proportion of the French winter wheat crop displaying an ear of at least 1cm is only 7%, which is 10 points below a year ago. The French winter barley crop at that stage is 4% compared to 11% this time last year.
Germany's DRV released their first forecasts for crop production there this year today, estimating production lower for winter wheat, barley and OSR on a combination of reduced area and lower projected yields for all three crops.
For winter wheat, they estimate output down 4.1% at 26.3 MMT. They see 2015/16 winter barley production down 4.8% at 9.0 MMT, and estimate this year's OSR crop to fall 16.6% to 5.2 MMT.
