EU Grains Post Decent Weekly Gains, Led By Corn

03/07/15 -- EU grains closed mixed on the day, but higher for the week, with corn making the largest advances as the market seems to think that this is the next crop under threat from European heat/dryness.

At the close, Jul 15 London wheat was down GBP0.50/tonne to GBP120.25/tonne, Sep 15 Paris wheat closed a euro easier at EUR204.00/tonne, Aug 15 Paris corn was unchanged at EUR193.75/tonne, whilst Aug 15 Paris rapeseed was down EUR2.75/tonne to EUR394.25/tonne.

For the week, front month London wheat was up GBP5.45/tonne, with Paris wheat up EUR9.75/tonne, corn EUR20.25/tonne higher and rapeseed up EUR3.00/tonne.

At less than EUR10/tonne, new crop corn is now at the smallest discount to wheat in a year, the HGCA note.

French crop conditions are wilting in the heat, with FranceAgriMer today cutting the proportion of winter wheat rated good to very good by 3 points from a week ago to 78%. Although that's still better than 71% a year ago, it is the fifth weekly decline in a row.

It is also worth remembering that whilst these reports are released on Fridays, they actually refer to crop conditions as of the Monday of that week, so it's highly likely that further damage has been done by the very high temperatures seen in France from Tuesday onwards.

In contrast, the more mature French winter barley crop was rated 86% good to very good, up a point on a week ago. The same can't be said for spring barley however, which was cut from 79% good to very good a week ago to 73% this time round. Corn ratings were also cut two points to 81% good to very good. Only 1% of the crop is at the key silking stage yet.

They said that the 2015 French winter wheat harvest was officially 3% complete as of Monday, with the Midi Pyrenees region the furthest advanced at 37% complete.

Almost half the French winter barley crop had already been cut as of Monday (47%), making very rapid progress from only 4% done a week previously. That is also higher than 34% harvested this time last year. They've even cut 1% of the spring barley crop nationally, with the Centre region 8% done already.

French analyst Arvalis said that soft wheat in the southern two thirds of the country is now mature, and should be less damaged by this week's heat that crops in the north which are still at the filling stage.

Wheat yields in the north of the country will therefore not be as good as might have been expected around 10 days ago, they said.

EU soft wheat export licences were 303.7 TMT for the week through to Jun 30, bringing the full season total to a new record 31.3 MMT, up 11.7% on a year ago. Barley export licences were granted for 438.9 TMT, taking the full season total to 9.1 MMT, up nearly 60% from 2013/14.

The leading French export hub of Rouen shipped out 130.8 TMT of grains last week, up from 110.6 TMT the previous week. That included soft wheat exports of 31.5 TMT to Algeria, 41.4 TMT to the Philippines, 43 TMT to Thailand and 8.1 TMT to the UK.

FCStone estimated the EU soft wheat crop at 140.68 MMT, down 5.4% on a year ago. They see corn output falling 14% year-on-year to 66.64 MMT.

Ukraine said that they'd finished 2014/15 exporting 34.8 MMT of grains, of which 11.2 MMT was wheat, 18.8 MMT was corn and 4.5 MMT was barley.

The Ukraine Ag Ministry said that the country will produce 60 MMT of grains this year, with domestic consumption of 27 MMT and exports in 2015/16 at 34-37 MMT. They say that the country will account for 15% of the global corn trade in the new season, along with about 8% of the international wheat export market.

Russia said that they'd ended 2014/15 exporting 30.5 MMT of grains, a 20% rise on a year ago. That includes 21.7 MMT of wheat (up almost 19%), 5.3 MMT of barley (up over 200%) and 3.0 MMT of corn (down nearly 26%).

They estimate 2015/16 grain exports at a similar level (30 MMT), including around 21 MMT of wheat.

The early 2015 Russian grain harvest has been completed on 542k ha, producing 2.1 MMT of mostly barley to date, with average yields at 3.9 MT/ha versus 3.78 MT/ha a year ago.

Ukraine's early grains harvest, which excludes corn, is 6% complete on 310k ha, producing 929 TMT of grain with yields at 3.0 MT/ha compared to 2.8 MT/ha a year ago.