EU Grains Rise - With Exports Looking Set To Beat Forecasts

20/03/15 -- EU grains closed mostly higher on the day and for the week, with wheat in particular managing some pretty decent gains on the back on continued robust exports.

At the finish, Mar 15 London wheat was up GBP1.85/tonne at GBP123.40/tonne; May 15 Paris wheat was EUR2.25/tonne higher at EUR196.75/tonne; Jun 15 Paris corn was EUR0.25/tonne firmer at EUR163.75/tonne; May 15 Paris rapeseed was also up EUR0.25/tonne at EUR371.25/tonne.

This was London wheat's best close in more than a month, and the highest for Paris wheat in almost two.

For the week, London wheat advanced GBP5.60/tonne, Paris wheat gained EUR6.50/tonne, rapeseed added EUR2.25/tonne, but corn fell EUR0.50/tonne. So much for the HGCA's theory that London wheat is following Paris corn more closely than the French wheat market.

EU soft wheat exports are now running at 8% above year ago (record) levels, based on last night's latest figures from Brussels. Although the USDA have been raising their forecasts for EU wheat exports in recent WASDE reports, they currently still have them to fall 1.3% this season.

The USDA's current EU-28 "all wheat" export estimate is 31.5 MMT, which also includes durum and wheat flour exports. According to the EU Commission, export licences so far this season stand at 23.7 MMT of wheat, 562 TMT of wheat flour and 782 TMT of durum, which all adds up to a fraction over 25 MMT with 14 weeks of 2014/15 left to run.

Based on the USDA full season estimate, that leaves 6.5 MMT to export between now and the end of June. Yet Brussels has granted almost 2.5 MMT worth of export licences for soft wheat, durum and wheat flour in the past two weeks alone.

EU barley exports have also been brisk this season. The USDA currently pegs those at 7.5 MMT, versus the more than 6.5 MMT that's already been authorised for export. EU barley exports so far this season have averaged 172 TMT/week. If they were to continue at that pace, then that would add a further 2.4 MMT to the full season total, which would then beat the USDA forecast by 1.4 MMT.

In Ukraine, the Ag Ministry say that early spring grains (which excludes corn) have been planted on 401,000 ha, or 16% of the planned area. Most of this is spring barley (287,000 ha).

Corn planting in Ukraine usually takes place in April and May. APK Inform say that the big production increase that the country has seen over the last decade has largely been due to better yields due to the wider use of imported hybrid seed.

In 2005, when national yields averaged 3.74 MT/ha, Ukraine imported 21% of its corn seed needs. By last year that had more than doubled, to around 43% of the corn planted in Ukraine coming from imported seed - yields in 2014 averaged 6.11 MT/ha.

It will be very interesting therefore this year to see if the proportion of imported seed drops, and by how much, given the various problems that the country currently has (weak currency, lack of easily available credit etc). If it does fall then we should expect to see a correlating decline in yields, unless the weather is particularly kind.

There was no weekly update on French crop conditions from FranceAgriMer today due to "technical problems".