EU Grains Recover Some Of Monday's Losses

28/07/15 -- EU grains bounced mostly higher today, recovering some (but by no means all) of yesterday's losses.

At the close Nov 15 London wheat was up GBP0.50/tonne at GBP122.00/tonne, Sep 15 Paris wheat was EUR0.75/tonne higher at EUR182.25/tonne, Aug 15 Paris corn was down EUR0.75/tonne to EUR176.00/tonne, whilst Aug 15 Paris rapeseed was EUR4.25/tonne lower at EUR369.50/tonne.

The EU Commission's MARS unit appeared to confirm yesterday what the trade was already thinking - that the recent heat and dryness in Europe will ultimately prove to be more of a problem for corn at the pollination stage than for more mature wheat or barley, for which the threat came generally just a little too late.

They did trim their estimates for EU-28 average yields for wheat, barley and OSR from a month ago, but not by much. Yields will however still be down on last year's bumper levels.

Wheat yields in the bloc are now seen averaging 5.57 MT/ha versus 5.62 MT/ha a month go, and down 5.6% on a year ago. Barley yields were pared back from 4.65 MT/ha to 4.61 MT/ha, down 7.1% compared to 2014. OSR yields were estimated at 3.23 MT/ha versus 3.28 MT/ha a month ago, down 10.8% versus last year.

For corn however this month's drop was more severe, with yields cut from a previous 7.22 MT/ha to 6.71 MT/ha, now down 16.9% on a year ago.

In France, wheat yields were estimated at 7.25 MT/ha (versus 7.41 MT/ha in June and 7.36 MT/ha in 2014), in Germany it was 7.66 MT/ha (versus 7.77 MT/ha and 8.63 MT/ha respectively) and in the UK it was 8.07 MT/ha (versus 8.14 MT/ha and 8.58 MT/ha).

For the record UK barley yields were estimated at 6.09 MT/ha from 6.12 MT/ha previously and 6.4 MT/ha in 2014. UK OSR yields were pegged at 3.73 MT/ha, up from 3.70 MT/ha last month and also last year.

French corn yields were cut from 9.39 MT/ha in June to 8.63 MT/ha this time round, a fall of 13.9% compared to 2014.

The harvest in the FSU meanwhile is advancing, and competition from the region remains fierce.

In Ukraine the early grain harvest is now 69% complete on more than 7 million ha producing a crop of 23.66 MMT to date, with yields at 3.36 MT/ha versus 3.33 MT/ha in 2014. Wheat accounts for 16.93 MMT of that total (with harvesting 68% complete).

The Ukraine Ag Ministry said that the country had now exported 1.87 MMT of grains so far in this new season, of which 492 TMT was wheat, 831 TMT corn and 548 TMT barley. There's a further 319 TMT already loaded waiting to leave, so total exports should top 2 MMT this month.

A senior Ukraine Ag Minister said that he expects the country to export a record 37 MMT this season, up from 34.6 MMT in 2014/15.

The USDA FAS in Russia increased their estimate for this season's grain crop to 97 MMT, which is 6% down on last year.

They see exports this season at 29 MMT versus 30.9 MMT in 2014/15, including 21 MMT of wheat.

Predictably the Russian Ag Ministry are a bit more bullish, saying that production could exceed 101 MMT this year (105.3 MMT in 2014).

Agritel report that the recent slump in value of the Russian rouble, linked to falling global oil prices, means that domestic wheat prices are now above the level where anything other than a nominal RUB50/tonne export duty kicks in. Based on current prices a duty of around $3.50/tonne is payable by the exporter, they calculate.

That could increase further if more rouble depreciation lies ahead of course.