EU Grains Mostly Lower Again, Expiring May 15 Paris Wheat Crashes

07/05/15 -- EU grains closed mostly lower on the day. We were expecting some "erratic" behaviour from front month May 15 Paris wheat ahead of the expiry of the contract on Monday. We certainly got it today, as those left still needing to sell got squeezed out.

The day ended with May 15 London wheat GBP0.20/tonne lower at GBP109.35/tonne, May 15 Paris wheat crashed EUR9.50/tonne lower at EUR161.50/tonne although other months were only down less than a euro, Jun 15 Paris corn was up EUR0.25/tonne at EUR155.25/tonne and Aug 15 Paris rapeseed was down EUR4.00/tonne at EUR352.00/tonne.

French grain exports have slowed right up, with the leading port of Rouen only shipping out 82,520 MT in the week through to May 6 - a four month low and 45% down on the previous week. Soft wheat exports accounted for only 41,000 MT of that total - the lowest volume since September. The only bright spot was China taking another 41,520 MT of feed barley.

The FAO released their first look into global crop production in 2015, placing the world wheat crop at 719 MMT, which is 10 MMT below last year's record, primarily due to reduced output in Europe.

They peg output here at 147 MMT, down 5.5% versus 155.6 MMT last year. Production in Russia is forecast to decline 6.8% to 55 MMT and that of Ukraine will fall 8.3% to 22 MMT, they predict.

"In the EU, the crop is generally in good condition owing to warmer-than-usual weather, particularly over north-eastern countries. In some areas of Western Europe there is prolonged lack of precipitation. However, for the moment, the only region of concern is in northern Portugal," they said. Portugal of course is not a major grain producing country.

"In the Russian Federation, winter wheat continues to emerge from dormancy and conditions are mixed despite the generally favourable climatic conditions, due to dry conditions in the fall and a delayed spring in most regions. Due to the late spring there has been a delay in sowing of cold resistant spring wheat in Central, Volga and Southern Russia," they added.

MDA CropCast forecast the world wheat crop in 2015 somewhat lower than the FAO at 709.6 MMT, down 2.63 MMT from a week ago, principally due to reduced expectations for India.

They see the EU-28 wheat crop at 143.1 MMT, with Russian output at 53.9 MMT and Ukraine's at 23.0 MMT. All those figures are unchanged from a week ago. They also predict an EU-28 barley crop of 56.4 MMT and a corn crop of 62 MMT.

They continue to be out on limb with their estimate of 24.56 MMT for the EU rapeseed crop however. French analysts Strategie Grains, whilst increasing their forecast by 200,000 MT yesterday, are only at 21.9 MMT - an 8.5% decline on last year.

ADM forecast the EU-28 rapeseed crop a tad lower than that at 21.7 MMT, some 10% below a year ago. German production will slump nearly 13% to 5.4 MMT, they predict. Their estimate for the UK incidentally is 2.3 MMT versus 2.4 MMT last year.

Sparks Polska meanwhile are estimating that the Polish rapeseed crop will fall 11% to 2.9 MMT.

Australia's rapeseed exports in March were 26% down year-on-year at 343 TMT, said Oil World. The EU was the top buyer taking 136 TMT, but that's down almost 44% on 241 TMT a year ago. Nov/Mar exports are down 23% at 1.75 MMT. Again the EU has been the top home, taking 0.78 MMT, but that's 38% less than the 1.26 MMT that was purchased a year previously.

UkrAgroConsult said that 4% of Romania's winter rapeseed crop suffered winterkill, and a further 5% is in a weak/thinned state. They said that Romanian sunflower planting is 80% complete. Ukraine growers intend to plant more sunflower and soybeans this year at the expense of less profitable corn, they added.

Ukraine's 2015 corn crop is said to be 72% planted. The Deputy Ag Minister said that he expects spring planting to be completed in the next 7-10 days.

They'll need longer than that in Russia, where plantings are only 7.5% done on spring wheat, 42.7% complete on spring barley and 47.4% finished on corn.

Interestingly Bloomberg, quoting AccuWeather, said that the Black Sea region could see “long stretches of dry weather,” with heat waves common in July and August this year.

At home, Defra said that the UK milled 553 TMT of wheat in the 5 weeks to 28 Mar, slightly less than 560 TMT a year earlier. The volume milled in the season so far is however up 7.9% at 5.17 MMT. We clearly aren't eating enough biscuits though! Production of biscuit-making flour was down 23.6% in the 5-weeks to Mar 28 and is 17% lower for the season so far.