EU Grains End Mostly Higher On Consolidation, But Overall Trend Still Remains Down

30/07/15 -- EU grains closed mostly higher, consolidating somewhat following the recent rout.

Nov 15 London wheat closed GBP0.10/tonne easier at GBP120.5/tonne, Sep 15 Paris wheat was EUR1.75/tonne firmer at EUR181.50/tonne, Aug 15 Paris corn was EUR0.25/tonne higher at EUR174.00/tonne, whilst Aug 15 Paris rapeseed ended up EUR5.00/tonne at EUR373.0/tonne.

The London and Paris wheat markets had fallen more than 8% in the past three weeks as of last night's close, whilst Paris rapeseed had fallen by over 5% in the same period. Paris corn meanwhile was down more than 10% over the past four weeks.

You can't call today's action a reversal, but it may be safe to say that some consolidation was overdue, even if the trend still appears to be lower on harvest pressure and the usual stiff competition from the Black Sea that we generally see at this time of year.

The latter continue to be aided by their respective weak domestic currencies. The Russian rouble is down by 6.7% against the US dollar so far this month, with the Ukraine hrvynia falling by 5.4% versus the US currency in the same period.

Reuters report that cheap Black Sea feed wheat is "flooding" into the Asian market, knocking Brazilian corn out of feed rations.

The Philippines, South Korea and Thailand thought to have bought around 3 MMT of Black Sea feed what for Jul/Dec shipment recently, they say.

The former most recently booked 100 TMT of Ukraine feed wheat for Sep/Oct delivery at prices said to be around $210-220 including freight. Knocking off the freight and converting that back to sterling that's roughly the equivalent of where the London feed wheat future currently trades, but on the basis of already loaded onto a boat in Odessa.

The Russian grain harvest is 21.9% complete on 10.2 million ha, which is 22% behind last year's pace. That's produced a crop of 35.4 MMT to date. Average yields at 3.47 MT/ha are still ahead of this time last year (3.43 MT/a), but now only just.

There are clear signs that, as the pace picks up away from the more productive areas in the south of the country, that we will start to see this average slip to below last year's levels.

The Russian wheat harvest is said to be 29.3% complete on 7.8 million ha, which is 23.5% down on this time last year. That's produced a crop of 28.4 MMT so far, with national yields at 3.66 MT/ha versus 3.63 MT/ha a year ago.

A Bloomberg survey provisionally pegged the EU-28 corn harvest at 63.3 MMT this year, with the French harvest at 14 MMT, Italy at 7.5 MMT and Romania at 10.7 MMT.

That's lower than last month's Coceral forecast, reflecting recent heat and dryness. They were at 65.7 MMT in June versus 73.8 MMT a year ago. That included a French estimate of 15.5 MMT, which appears to be where the worst of the losses are thought to most likely have occurred.

MDA CropCast today cut their EU-28 corn production forecast by 0.95 MMT on a week ago. They now only see this year's crop at 59 MMT.

On the international tender front, Tunisia are said to have bought 84,000 MT of optional origin soft milling wheat in a tender for 134,000 MT.