Paris Wheat Scores Rare Egypt Success, But Competition Remains Fierce

18/09/15 -- EU grains closed mostly lower on the day, although Paris milling wheat managed a few small gains thanks to a partial success in the latest Egyptian tender.

At the close, Nov 15 London wheat was down GBP0.05/tonne to GBP110.45/tonne. In Paris, Dec 15 wheat rose EUR0.25/tonne to EUR167.25/tonne, Nov 15 corn finished EUR0.75/tonne lower at EUR161.75/tonne and Nov 15 rapeseed ended down EUR3.50/tonne at EUR359.50/tonne.

For the week that puts London wheat GBP1.55/tonne lower, with Paris wheat unchanged, corn down EUR3.25/tonne and rapeseed EUR3.75/tonne easier.

Egypt's GASC were back in the market tendering for wheat today, and finished up buying a 230,000 MT mixture of Ukraine, Russian and French origin material. The prices paid were quite diverse: $174.95/tonne for Ukraine origin; $182.80/tonne and $183.95/tonne for Russian origin: $177.74/tonne for French origin.

When freight is added on the Ukraine wheat cost $188.40/tonne C&F versus $192.50/tonne for the Russian wheat and $193.37/tonne for the French material.

So, whilst French wheat did significantly undercut Russian product on an FOB basis, it was still a little more expensive when the more expensive freight was included. That won't necessarily always be the case into other destinations in North Africa though, like Algeria who are expected to need to import 7.7 MMT of wheat this season, according to the USDA's FAS.

That provided the French market with a little boost today, although it also remains a fact that Ukraine origin was still significantly cheaper than both Russian and French material.

EU sales picked up a bit this past week, with Brussels issuing 525 TMT worth of soft wheat export licences, a 48% increase on last week's albeit modest total. Even so the cumulative season to date volume released is still only 4.2 MMT, which is 27.6% down on last year. The USDA currently forecast EU-28 all wheat exports in 2015/16 to only lag last season's record volume by just 8%, so some significant improvement is needed here to get close to their estimated 32.5 MMT.

Barley exports are however flying along, with 453 TMT worth of export licences granted this week, the season to date total is an impressive 3.2 MMT - up 77.8% on this time last year. The USDA currently has these down to fall 26% in 2015/16. Indeed, by next week we should be halfway to achieving the USDA's forecast of 7.0 MMT for the season.

At home, the HGCA said that the UK wheat harvest had sped to 90% complete as of Tuesday night, up 20 points in a week. "Improved weather over the last week allowed increased opportunities for farmers to harvest any remaining wheat crops in the south and allowed improved progress further north. Rate of harvest was higher than in recent weeks, with an estimated 350,000 ha of wheat harvested in the last seven days," they said.

They held steady with their average yield forecast of 8.5-8.7 MT/ha, which suggests a final harvest of 15.9-16.3 MMT using their earlier planted area figure of 1.87 million ha. Some still think that this area estimate may have been a bit on the low side, and that yields could end up right at the top end of the scale, pushing final production up to around 16.5 MMT.

The UK spring barley crop is now 70% harvested, also up 20 points on the week, with average yields pegged at 5.9-6.1 MT/ha, up a little on the 5.8-6.0 MT/ha estimated a week ago.

Oats are 90% done, winter OSR is 99% complete and half of the UK spring OSR crop has now been harvested, they said. Yields of all these crops are also well above average, they added.

That leaves a lot of grain to both store and sell at some point here in the UK. The best price on offer will be from the domestic consumer, but he's largely well covered through to Christmas. Export homes are there, but they're spoilt for choice with the Black Sea falling over itself to compete with the EU. Wheat and barley out of the Baltic countries is also offered very competitively.

Back across the Channel, FranceAgriMer said that the corn harvest there is 1% complete nationally, with the Rhone Alps region the furthest advanced at 7% complete. A start has also been made in the Alsace and Centre regions (both 2% complete) and Aquitaine (1% done). They cut the proportion of the crop rated good to very good by 1 point from a week ago to 55%, some 31 points lower than this time last year. They have 21% of the crop rated poor to very poor versus only 3% this time last year. Some of that will probably end up just being cut for silage.