EU Grains Mostly Lower As French Harvest Accelerates

17/07/15 -- EU grains closed mostly lower, with only rapeseed managing to finish the day in the green. Everything ended up a net loser for the week.

Nov 15 London wheat finished down GBP1.55/tonne at GBP125.45/tonne, Sep 15 Paris wheat was EUR1.75/tonne easier at EUR192.75/tonne, Aug 15 Paris corn was down EUR1.25/tonne to EUR181.25/tonne, whilst Aug 15 Paris rapeseed was up EUR1.00/tonne to EUR388.75/tonne.

For the week that puts London wheat GBP5.85/tonne lower, for a net loss of 4.5%. In Paris, wheat lost EUR4.75/tonne, or 2.4%, corn was down EUR3.50/tonne, or 1.9%, and rapeseed fell EUR3.75/tonne, or 1%.

Continued euro weakness is fairly and squarely behind the fact that London wheat came off the worst of the bunch. The pound closed at a new highest since Nov 2007 tonight, and gained 3.4% versus the single currency in the course of the week.

The pound was helped this week by comments from BoE governor Carney that a UK base rate rise  could be on the cards "around the turn of the year".

Euro weakness will certainly be helping exports on the continent, with reports emerging this week that French wheat had been sold to Mexico, despite an abundance of wheat for sale in neighbouring USA. Algeria are said to have bought 250 TMT of soft milling wheat in a tender for 50 TMT for October shipment. It is thought that France will be the most likely supplier of that too.

Brussels announced last night that they'd issued 470 TMT worth of EU soft wheat export licences this past week, up a little on 467 TMT the previous week, taking the total for the only 2-weeks old new 2015/16 season to 937 MMT, which is almost 50% more than the US has reported in the same period.

The recent dryness and heat in France has accelerated the pace of the 2015 harvest, minimising the weather risk to winter planted grains at least.

FranceAgriMer said that the French winter wheat harvest had moved on to 38% complete as of Monday, up from 15% done a week previously and versus only 4% this time last year.

Agritel say that early French wheat cuts are displaying "rather satisfying results".

The French winter barley harvest is probably now complete, it was already 96% done as of Monday, up from 85% the previous week and compared to only 75% harvested a year ago. Spring barley is 17% harvested, up from 3% a week ago and versus only 1% done this time last year.

Winter wheat crop conditions were rated unchanged on a week ago at 75% good to very good (versus 72% a year ago), spring barley conditions fell one point to 65% (now also a point behind this time last year). Corn ratings fell from 71% good to very good to 67%, well behind 84% a year ago, as that crop now bears the brunt of the current prevailing weather conditions. The crop is said to be 54% silking versus only 22% a year ago.

The HGCA said that the less advanced German wheat crop is now under more threat from the weather than the French crop. Strategie Grains this week revised potential German wheat yields down from 7.98 MT/ha to 7.70 MT/ha. Coceral have them even lower at 7.55 MT/ha, down 12.5% on a bin-busting 8.63 MT/ha a year ago.

Ukraine say that their 2015 early grain harvest (which excludes corn) is 31% complete versus 47% done this time a year ago. That's produced a crop of almost 10 MMT so far versus 14 MMT a year ago. Average yields are said to be 3.15 MT/ha compared to 3.06 MT/ha at this time in 2014.

The wheat harvest is 26% done producing 6 MMT to date, which implies a final crop of around 23 MMT versus the USDA's 24 MMT estimate and compared to 24.75 MMT a year ago. The Ukraine barley harvest is 50% complete, producing 3.7 MMT to date, implying final production of around 7.4 MMT, which is far higher than the USDA's current 6.0 MMT prediction.

The Ukraine rapeseed harvest is said to be 17% complete, producing 232 TMT of the oilseed to date. That only suggests a final crop of 1.36 MMT this year, versus a USDA forecast of 1.8 MMT and 2.2 MMT a year ago. It's unclear however if the figures from the Ag Ministry include, or exclude, spring rapeseed plantings.