EU Grains Attempt Feeble Rally Following Recent Rout

19/08/15 -- EU grains closed mixed, attempting a relatively feeble and half-hearted recovery following the recent rout. Nov 15 London wheat is down almost 13% since the first day of July, whilst the Paris market has fallen 12%. Paris rapeseed is down by almost 9% in this time. Corn has fared a little better on EU production worries, but is still down over 7% in the same period despite these concerns.

At the close, Nov 15 London wheat was up GBP0.45/tonne to GBP114.45/tonne, Sep 15 Paris wheat was EUR3.25/tonne easier at EUR170.50/tonne, Nov 15 Paris corn was down EUR1.00/tonne to EUR175.25/tonne, whilst Nov 15 Paris rapeseed slumped EUR6.00/tonne lower to EUR362.75/tonne.

Benchmark Nov 15 Chicago soybeans fell below $9/bushel for the first time in the contract's history today, which put rapeseed under pressure despite lower production estimates for it here and around the globe.

The German Stats Office said that the country's carryover grain stocks as of Jun 30 were up by a third compared to a year previously at 2.6 MMT, which should help ease the blow of production in 2015 being estimated 11% lower by the farm association DBV yesterday.

Russia's harvest rumbles on, and is now said to be 44.7% complete on over 21 million ha, producing a crop of 60.5 MMT to date. Yields are said to be averaging 2.88 MT/ha, which is down 7.4% on a year ago at this time.

Wheat accounts for 43.7 MMT of that, the harvesting of which is now past halfway done. Average yields there are down 9.3% at 3.2 MT/ha.

As flagged up previously, as the harvest has progressed away from the more productive south, yields are dropping away and dragging the average down. Average yields in the Central region are over 17% lower than a year ago. They are down 12.5% in the Volga region, 13.5% lower in the Urals and 11% below last year in Siberia - although the harvest is only just starting in the latter two areas.

Nevertheless, the government are standing by their estimate for a 2015 grain harvest of at least 100 MMT, and maybe more.

The Russian Ag Ministry say that wheat exports Jul 1 to Aug 9 were 1.66 MMT, less than half of the volume shipped out in the same period in 2014.

Rusagrotrans see a surge coming this month though, they estimate exports at 3.7-4.0 MMT this month, up from the 3.2 MMT previously forecast, although still less than the record 4.5 MMT that was said to have been exported in Aug 2014.

In Kazakhstan the harvest is still in it's early stages, only 6.3% complete at almost 1.5 MMT. Yields here are averaging 1.6 MT/ha, which might sound like a disaster to you and me but they were little more than 1 MT/ha this time a year ago.

In Ukraine, the Ag Ministry there say that August heat and dryness could knock 10-15% off corn yields this year. The prevailing conditions have also caused premature ripening of the crop, they add.

Shanghai JC Intelligence say that the Chinese government are considering cutting the price it pays local corn growers (said to be close to $300/tonne last year), possibly as early as the impending 2015/16 marketing year which begins in October, in an effort to simply stop stock-piling so much of the wretched stuff. They are looking at moving away from a fixed price to a market-based pricing system, they say. Local prices could be cut by 20% analysts suggest.

That could also have a negative impact on China's corn and sorghum imports.