EU Wheat Tumbles On US Rains, Large Carryover Stocks

13/04/15 -- EU grains closed mostly lower, following the US wheat market down after weekend rains in the US breadbasket states of Kansas, Oklahoma and Texas proved to be heavier and more widespread than expected.

The day ended with May 15 London wheat down GBP2.45/tonne at GBP118.05/tonne, May 15 Paris wheat fell EUR2.50/tonne to EUR187.75/tonne, Jun 15 Paris corn was unchanged at EUR164.25/tonne and May 15 Paris rapeseed rose EUR4.75/tonne at EUR374.50/tonne.

At the close, the May 15 old crop/Nov 15 new crop spread on London wheat had widened to exactly GBP10/tonne. By comparison the similar May 15/Dec 15 carry on Paris wheat is only EUR2.25/tonne tonight.

In the case of London wheat the gap between the two crop years is rather large indeed, which would suggest that either old crop prices need to move up, or new crop prices must come down. The large volume of unsold 2014 harvest wheat still being carried by UK growers might suggest that the former scenario is the least likely. So too might the relatively narrow differential between new crop London/Paris wheat. We shall see...

Based on current crop conditions and official planting estimates, France could be in for a record soft wheat crop in 2015. Harvesting of that is only 3 months away.

Despite a strong export campaign, FranceAgriMer last week estimated 2014/15 soft what ending stocks up more than 50%, with barley stocks up by a third and those for corn rising by double that percentage.

Meanwhile Russia also looks set to carry a large volume of old crop wheat into new crop following the Feb 1 introduction of the punitive export duty on wheat, which could minimise potential losses to the 2015 crop from poorly established crops prior to the onset of winter and reduced yields due to financial cut-backs.

Rusagrotrans last week estimated Russia's 2014/15 grain ending stocks at a record 15.5 MMT, far higher than the previous all time high (10.6 MMT) set in the export embargo season of 2010/11.

Russia's wheat exports since the duty was introduced (Feb 1 to Apr 8) fell 59% year-on-year to 1.1 MMT, according to the Russian Ag Ministry. Even so that still takes full season exports to 19.6 MMT versus 15.6 MMT a year previously.

Full season so far Russian barley exports have more than doubled year-on-year at 4.5 MMT. Cumulative corn exports meanwhile are down by more than a third at 2.1 MMT.

Spring grains have so far been planted on 1.4 million hectares in Russia versus 1.7 million this time last year, say the Ag Ministry.

The Ukraine Ag Ministry meanwhile said that winter cereal crop losses were only 0.4%, and said that 87% of the crop is in good to satisfactory condition. Winter OSR in Ukraine hasn't fared so well however, with an estimated 9% of the crop "lost" and a further 13% of autumn plantings rated as "weak/thinned".

One Ukrainian analyst estimated their 2015 wheat crop at 20.0 MMT, down 17% from 24.1 MMT last year.

Egypt said that they aim to buy 3.7 MMT of wheat on the domestic market in a purchasing campaign that starts tomorrow and will last for three months.

Iraq are tendering for 50,000 MT of US, Canadian, Australian or Russian wheat.