Nogger's Blog

14/10/15 -- EU grains traded little changed, but generally a bit higher in the morning. That failed to hold in afternoon business however once US market awoke, and things slowly sank into the red. Fresh news was again pretty thin on the ground, with just the old chestnuts of Russian/Ukraine and US/Australian dryness getting debated.

At the close, Nov 15 London wheat was down GBP1.00/tonne at GBP116.00/tonne. In Paris, Dec 15 wheat was EUR2.50/tonne easier at EUR177.50/tonne, Nov 15 corn was down EUR1.00/tonne to EUR163.50/tonne and Nov 15 rapeseed was off yesterday's 9-week high, down EUR1.25/tonne to EUR379.50/tonne.

An increased chance of rain arriving to southern Russia was one of the reasons being cited for the afternoon weakness in wheat, although the various forecasts I am looking at are far from being all in agreement on that. The GFS model offers above average rains for only the extreme south west of Russian winter wheat areas around the Caspian Sea. The central and eastern two thirds of Ukraine is set to get below average rainfall during this time too, according to that model.

The GFS model has below normal temperatures for the region for the next few days, giving way to closer to "normal" readings after that. The CMC model on the other hand has things turning much colder than normal a week from now, generally 6-8F below the average for this time of year, which would mean minimum temperatures well below freezing in the 20's Fahrenheit.

A report on Reuters said that soil moisture conditions in Ukraine are around 20% below the 20-year average, which is far worse than a year ago when moisture reserves were 11% deficient.

Current conditions are reminiscent of winter sowings in 2009 (for the 2010 harvest) and 2011 (for the 2012 harvest), they said.

Ukraine wheat yields ultimately fell at least 15% on both of those years, they noted.

Rapeseed, being the earliest planted winter crop, is likely to be a biggest casualty again this year it would seem (very little spring rapeseed is planted in Ukraine). Sowings last winter dropped 17% to 685,000 ha, and as of Oct 8 last week only 611,000 ha had been sown so far this year.

With the optimum planting window for rapeseed long since passed, then 611,000 ha could be pretty much as good as it gets. That would be a near 11% drop again this year, or for a decline in area of more than a quarter over the last two years.

Winter wheat and barley plantings in Ukraine are also well behind, leading the nation's state weather service to predict that overall winter grain plantings could decline 30% this year.

These "lost" acres can of course be planted in the spring, but are more likely to be switched into corn, soybeans or sunflowers than they are to be sown with rapeseed, wheat or barley.

Russian plantings aren't so tardy, but soil moisture levels in western Russia are still "well below average" report Reuters.

That potentially leaves winter-sown crops relatively under-developed and poorly established heading into the depths of the Russian winter. It's not a disaster yet, similar conditions prevailed a year ago too but timely and abundant spring rains ultimately saved the crop. What we don't currently know is will Russian growers be so lucky again in 2016?

The Russian Ag Ministry say that winter grain plantings there have now been completed on 14.8 million ha, or 86.8% of the government target. A year ago that figure was 15.2 million ha.

Harvesting of the 2015 wheat crop is 98.6% complete on 25.2 million ha for a crop of 63.4 MMT in bunker weight, they say.

The Russian barley harvest is 96.5% harvested at 18.1 MMT, and this year's corn crop is 54% done at 7.5 MMT.