EU Wheat Jumps, Despite Output Almost Matching Last Year, Exports Lagging And Stocks Rising

25/09/15 -- EU grains posted decent gains on the day and for the week.

At the close, Nov 15 London wheat was up GBP2.45/tonne at GBP115.80/tonne. In Paris, Nov 15 wheat was EUR3.75/tonne higher at EUR176.50/tonne, Nov 15 corn was up EUR2.00/tonne to EUR165.25/tonne and Nov 15 rapeseed was EUR5.50/tonne higher at EUR369.75/tonne.

For the week that puts London wheat GBP5.35/tonne higher, with Paris wheat up EUR9.25/tonne, corn up EUR3.50/tonne and rapeseed EUR10.25/tonne firmer.

Exactly why wheat posted bigger gains than corn this week is a difficult one to explain. The EU wheat crop is now estimated just a smidgen below last season's record, exports are significantly lagging those of a year ago in the face of stiff competition from the Black Sea and thus 2015/16 ending stocks are forecast at multi-year highs.

It's EU corn production and stocks that are seen well below year ago levels.

Brussels announced that they'd released 502 TMT worth of soft wheat export licences this past week. That's down from 525 TMT a week ago, and the season to date total now lags last year's pace by 26% at 4.72 MMT.

Coceral today became the latest trade body to release their latest EU crop production estimates, pegging the soft wheat crop here at 148.2 MMT, up sharply from the 140.6 MMT that they were expecting in June and now almost identical to last season's 148.3 MMT.

They raised their outlook on the size of the EU-28 barley crop up from 56.7 MMT to 60.3 MMT, which is now marginally higher than 60.2 MMT a year ago. Corn production was dropped from 65.7 MMT to 59.5 MMT, down sharply from 73.8 MMT a year ago.

Coceral now estimate the UK wheat crop at close on 16 MMT (with yields at 8.67 MT/ha), barley production at nearly 7.4 MMT and OSR output at a little over 2.4 MMT.

The HGCA said that the UK wheat harvest is now 97% complete and that yields are averaging 8.5-8.7 MT/ha, unchanged from a week ago and far above the 10-year average of 7.8 MT/ha, which suggests a final harvest of 15.9-16.3 MMT using their earlier planted area figure of 1.87 million ha.

They said that the small area of UK spring wheat sown was 80% harvested, along with a similar proportion of the UK spring barley crop and 95% of this year's oats.

FranceAgriMer said that the French 2015 corn harvest was 4% complete as of Monday night. They raised the proportion of the crop rated good to very good by one percentage point to 56%. Small areas of Lorraine have begun sowing winter wheat and barley, they said.

Russia said that they'd harvested 91 MMT of grains so far, and revised their final 2015 grain production estimate to 100-101 MMT. Exports in 2015/16 are now forecast at 30 MMT.

Russia's wheat exports should now start to pick up now that the government have eased the duty on foreign sales.

Ukraine's winter rapeseed sowings are well behind schedule due to dry weather, with around a third of the anticipated area still to be sown. That might not get into the ground at all, according to the IGC, who also say that they think it is unlikely that the EU rapeseed area will rise this year (for the 2016 harvest).