EU Grains Consolidate, Although Record Large French Wheat Crop Looms

06/05/15 -- EU grains closed mostly higher, with the exception of rapeseed which ended a little lower. I guess you could call that consolidation from the last couple of days trade.

At the finish, May 15 London wheat was up GBP1.45/tonne at GBP109.55/tonne, soon to expire May 15 Paris wheat ended unchanged at EUR171.00/tonne, although other months were around EUR2-3/tonne firmer. Jun Paris corn closed EUR1.50/tonne higher at EUR155.00/tonne and Aug 15 Paris rapeseed ended EUR0.25/tonne lower at EUR356.00/tonne.

Fresh news was relatively scarce. The pound was steady against both the dollar and euro ahead of tomorrow's General Election.

ODA estimated French soft wheat yields at 7.65 MT/ha, which is higher than the current forecasts from MARS (7.25 MT/ha) and Coceral (7.41 MT/ha). It's also an increase on their previous estimate of 7.63 MT/ha and 2.3% up on 7.48 MT/ha a year ago.

If we use the French Ministry's area estimate of 5.179 million ha - the highest in more than 20 years - then that would give us a French soft wheat crop of 39.62 MMT this year versus 37.5 MMT in 2014.

Add on a durum wheat crop of around 1.5-1.6 MMT and that pegs French all wheat production at record levels of more than 41 MMT.

Recall that FranceAgriMer currently project 2014/15 French wheat ending stocks up more than 50% compared with last season at 3.58 MMT, despite a strong export campaign. Certainly there would appear to still be large old crop wheat stocks in France judging by Senalia recently suspending the intake of wheat in Rouen.

That potentially leaves a very large exportable surplus to dispose of again in 2015/16.

Day one of the US Wheat Quality Council tour found potential average yields in Kansas of 34.3 bushels/acre - the lowest first day finding since 2001. That converts to just 2.3 MT/ha in terms we more clearly understand this side of the pond, which would be construed as a total disaster over here. The figure isn't however that much different to last year's first day findings of 34.7 bu/acre.

Russia's spring grain planting is making slow progress, with 7.2 million ha seeded so far. That's only 23% of the government target and is also 24% less than the 9.5 million ha that had been sown this time last year.

Of that, wheat accounts for 992k ha (7.5% of target) versus 1.32 million ha a year ago. Barley makes up 3.5 million ha (42.7% of target) versus 4.6 million ha a year ago, and corn 1.3 million ha (47.4%) compared to 1.5 million ha in 2014.

The Russian government don't appear to view this retarded progress as a problem at this stage, they still seem set to reduce the export duty on wheat to a token one next Friday.

The USDA's FAS in India cut their forecast for the country's wheat crop this year to 87 MMT, down 9.2% on last year due to heavy rains and hail damage just prior to harvesting. There will be quality issues too with what has been harvested, meaning that the country's millers will need to blend this off with higher quality imported wheat.

That could make India a net wheat importer in 2015/16 for the first time since 2010/11, they said.