EU Grains: Only Rapeseed Ends Week In The Green

28/08/15 -- EU grains closed mixed on the day, but mostly lower for the week - save for rapeseed which closed strongly to finish with net gains for the week.

At the close, Nov 15 London wheat was down GBP1.10/tonne to GBP113.65/tonne. In Paris Sep 15 wheat fell EUR0.25/tonne to EUR162.75/tonne, Nov 15 corn also lost EUR0.25/tonne to EUR169.00/tonne and Nov 15 rapeseed was up EUR5.75/tonne to EUR364.50/tonne.

For the week that puts London wheat GBP1.10/tonne lower, and in Paris wheat was EUR3.50/tonne easier, corn lost EUR5.25/tonne whilst rapeseed gained EUR7.00/tonne.

In it's second tender of the week, Egypt's GASC bought one 55,000 MT cargo of Ukraine wheat for Oct 1-10 shipment. The price paid was reported at $177.20/tonne FOB, with a further $13.60/tonne on top for freight taking the C&F price to $190.80/tonne.

There were a total of 16 cargoes offered: 9 Russian; 4 French; 2 Romanian and the one of Ukraine origin that was booked. On an FOB basis the cheapest Russian wheat was priced at just under $182/tonne, the best French offer was at $185.74/tonne and the best Romanian quote was $187.73/tonne.

It is interesting to see 9 Russian offers despite trade talk that sellers there are reluctant to commit until the rouble stabilises and ahead of a possible government decision to alter the way the current export duty on wheat is calculated.

The best Russian offer of around $182/tonne is the equivalent of around RUB11,900/tonne, meaning that at current rates it would have incurred a tax of around $7/tonne had it been successful, according to my calculations.

The Russian Ag Ministry said that the country's 2015 grain harvest was now 54.6% complete on 25.65 million ha - almost the exact same area as had been harvested a year ago at this time, This year's harvest has produced a crop of 69.3 MMT so far, say the Ministry, down from 73.8 MMT this time a year ago. Average yields are 2.70 MT/ha versus 2.87 MT/ha in 2014.

Wheat accounts for 47.7 MMT of the current total off 58% of the planned area, and barley adds another 13.9 MMT off 65.3% of the total area sown.

The Russian corn harvest is now also just about underway at 1.3% complete and local growers have also sown 2.3 million ha of winter crops for the 2016 harvest, or 13.5% of the Ministry forecast.

Faced with stiff competition from the Black Sea, and indeed the Baltic too, European exports are now starting to struggle. A bout of euro strength this week won't have helped either. Brussels released only 277 TMT worth of soft wheat export licences this week, down more than half on the previous week. Cumulative export licences for the season are now 17% below where they were a year ago.

The volume of barley licences granted also fell, down 47% from the previous week to 144 TMT.

The EU Commission today forecast total soft wheat exports this season at 27.87 MMT, a 16% drop compared with 2014/15's record.

They also cut their EU-28 corn production forecast this year to 58.7 MMT versus a previous estimate of 65.5 MMT.

They also cut their EU-28 corn production forecast this year to 58.7 MMT versus a previous estimate of 65.5 MMT.

FranceAgriMer raised French corn crop ratings by one point in the good to very good category - the first increase since mid-June. These now stand at 56%, which is 30 points less than this time last year.

The German Farm Ministry estimated the 2015 wheat crop there at 26.4 MMT, down 5% from a year ago.