EU Grains Recover Some Ground

13/08/15 -- EU grains closed mostly higher, escaping the worst of the fall out from last night's slump in the Chicago markets - led by a 6.2% plunge in soybeans following a bearish USDA WASDE report.

At the close, Nov 15 London wheat was up GBP0.65/tonne to GBP118.25/tonne, Sep 15 Paris wheat was EUR1.25/tonne higher at EUR177.50/tonne, Nov 15 Paris corn was up EUR1.00/tonne to EUR181.25/tonne, whilst Nov 15 Paris rapeseed was EUR1.50/tonne firmer at EUR375.275/tonne.

The USDA estimated the EU-28 wheat crop little changed from last month at 147.82 MMT, tweaking their area estimate a little lower, and upping average yields slightly.

EU 2015/16 corn production fared worse, with output forecast at 62.3 MMT, which was 3.5 MMT below last month and 12.9 MMT below last year’s record crop of 75.0 MMT, although not as low as some other estimates that are out there. Average yields were forecast at 6.58 MT/ha, 5.2% below last month, 17% below last year and 6.2% behind the 5-year average.

"After targeting western Europe during June, unfavorable conditions migrated east in July, most notably in south-central and southeastern Europe. A punishing heatwave with daily temperatures above 35°C (95°F) was accompanied by increased dryness. July is a critical period for corn in Europe because the plant is typically silking and tasseling. High temperatures (>35°C) during this sensitive period can cause severe pollination problems. In addition, a lack of summer precipitation in southern Europe resulted in very low soil moisture levels, limiting grainfill and reducing kernel size," they said.

The corn crop in France, Europe's largest producer, will tumble to 14 MMT this year they said. That's in line with the average trade estimate in a recent Bloomberg survey, although not as low as the French Ag Ministry's forecast of 13.5 MMT released on Monday.

There was little change to their forecast for EU-28 barley production this year, but another 300,000 MT was trimmed off the rapeseed crop here, taking that down to 21.1 MMT, a 13.4% fall compared to 2014.

French Analysts Strategie Grains raised their EU-28 soft wheat production forecast by 3.1 MMT to 144 MMT today, although that's still 5 MMT down on last year's record crop. Durum wheat production was unchanged from a month ago at 7.6 MMT, giving us a total EU all wheat crop of 151.6 MMT, considerably higher than the USDA's estimate from last night.

They slashed their corn production forecast to 59.6 MMT, down more than 21% compared to last year.

At home, Defra said that the English wheat area for the 2015 harvest was down 5.8% on a year ago at 1.7 million ha, a much larger decline seen in an earlier HGCA survey for the whole of Great Britain. In contrast OSR plantings only fell 2.9% to 613k ha (although that's still the smallest area since 2010 and a lower area than previously for the third year running) versus ideas of a GB decline in area of 7% reported by the HGCA in July. Winter OSR plantings were only down 1.9% according to Defra.

The total English barley area for 2015 increased 6%. Winter barley increased by 3.9% to 377 thousand hectares and spring barley increased by 8.3% to 374 thousand hectares, they said.

"The decrease in wheat area has been seen across all of the English regions ranging from a 3.8% decrease in the North West & Merseyside to a 7.7% decrease in the West Midlands. However the Eastern region and the East Midlands still grow almost half of the wheat in the country, accounting for 28% and 20% of the total area respectively. These proportions are unchanged since 2014," they added.

The HGCA are due to update us on harvest progress tomorrow. A week ago they said that this year's barley crop was 50% cut, so I guess that should be up to around 70-75% done now. They estimated the UK winter OSR harvest to be 35% complete last week, certainly good progress has been made with that locally this week.