EU Grains Mostly Lower Around Noon, Early French Barley Harvest Reporting Some Good Results

25/06/15 -- EU grains trade mostly lower. The euro is a touch weaker, with the clock ticking on a last minute deal for Greece ahead of Tuesday's $1.6 billion debt repayment due to the IMF.

At noon, Nov 15 London wheat is GBP1.20/tonne lower at GBP123.85/tonne, Sep 15 Paris wheat was is down EUR1.75tonne at EUR182.50/tonne, Aug 15 Paris corn is down EUR1.00/tonne at EUR166.00/tonne, whilst Aug 15 Paris rapeseed is unchanged at yesterday's 14-month closing high of EUR383.50/tonne.

Agritel report that the early barley harvest in France is showing some good results in terms of both yield and quality. They do however note that, as you might expect, crop maturity was a bit further down the line for winter barley before the recent dryness and heat issues hit hardest. It may not therefore be safe to conclude that wheat will fare similarly when that harvest begins.

Talking of which, Commodity Weather Group say that July is set to begin warmer than normal across much of the continent, especially so in France and Spain where temperatures could be 3-7C above normal for the time of year.

That could add to stress in winter wheat. These warmer than normal conditions could also prevail into August, they add.

The GFS model would appear to concur with this view. That is giving 2-8C above normal temperatures for Spain, France, Germany, Poland, northern Italy and the UK in the Jul 2-10 period. It is also predicting below normal rainfall for just about everywhere with the exception of northern England and Scotland, Greece, Romania and Bulgaria.

The early 2015 harvest in Ukraine has been completed on around 20,000 ha of the 7.62 million ha of winter grains (barley), according to the Ag Ministry there. Ukraine growers are also said to have planted 803,000 ha of winter rapeseed, harvesting of which should also get underway shortly.

The National Bank of Australia said that the developing El Nino weather event could cut wheat production there to 20 MMT or less, according to a report on Bloomberg. That would be the smallest Australian wheat crop in 8 years.

It would also be far less than the 23.6 MMT currently predicted by ABARES and the USDA's recent 26 MMT estimate.

The IGC were even higher last month at 27 MMT. They are due to release their latest June estimates later today.

MDA CropCast today estimated the Australian 2015/16 wheat crop at 23.1 MMT. They also trimmed their outlook on Europe a little to 142.1 MMT, down 5% on a year ago. Other than that they made no changes to their world wheat production forecasts.

They knocked 2.8 MMT off their global corn crop estimate, with 1.5 MMT of that coming from Ukraine, where production is now seen at 24.7 MMT versus 28.4 MMT a year ago. They also pared back their view on US corn production by 1.3 MMT due to recent wetness.

Commerzbank said that they expect the pound to slowly appreciate in value against the euro, getting to 1.42 in the first half of next year, and hitting 1.45 in the second half of 2016. Essentially saying that they aren't exactly bullish on sterling, but they are less bearish on the pound than they are on the single currency. They don't see UK interest rates starting to rise until Q1 of next year.

Barclays see things happening along the same lines, but in a much quicker time frame. They predict the pound getting to 1.45 by the end of this year, and moving on to 1.47 in Q1 of 2016.