EU Wheat Ends Higher, Despite Bearish Feel To USDA Numbers

Posted by Nogger - a legend in his own mind at 12:32 | Categorized as

09/10/15 -- EU grains closed generally higher on the day and for the week, despite a bearish feel to today's USDA report - for wheat at least.

At the close, Nov 15 London wheat was up GBP1.50/tonne at GBP117.00/tonne. In Paris, Dec 15 wheat was up EUR0.50/tonne at EUR179.50/tonne, Nov 15 corn rose EUR1.25/tonne to EUR166.75/tonne and Nov 15 rapeseed was EUR0.50/tonne higher at EUR376.75/tonne.

For the week, London wheat was GBP1.45/tonne higher, Paris wheat gained EUR3.75/tonne, corn added EUR4.75/tonne and rapeseed advanced EUR8.25/tonne.

The USDA's latest world supply and demand numbers raised the size of this year's EU-28 wheat crop by more than 1 MMT, taking that up to 155.3 MMT. That's the second largest in history, and a total beaten only by last season's record 156.5 MMT.

There were also production increases of 1 MMT each this month for Canada and Australia, and 0.5 MMT extra for Ukraine. World wheat ending stocks were raised almost 2 MMT to a new record 228.5 MMT. That means that 31% of this year's world wheat production will still be with us when we start the new 2016/17 crop year.

On the world wheat export front, Ukraine's prospects were increased by 1.5 MMT to 15 MMT, Canada's were upped by 1 MMT to 19.5 MMT, whilst Europe, Russia, Kazakhstan and Australia were all seen increasing foreign sales by 0.5 MMT more than a month ago.

In the case of Europe, exports are now forecast at 33 MMT, some 6.8% below last season's record.

It is noteworthy therefore that the EU has currently only released 5.8 MMT worth of soft wheat export licences, a 22.7% decline on this time last year.

France is the leading EU exporting nation of course, accounting for 34% of that total to date, followed by Germany with almost 20%. It is also worth noting that Lithuania and Latvia's combined total is slightly larger than that of the Germans, indicating just how strong competition is from the Baltic nations at the moment.

The USDA left their forecast for the EU-28 corn crop unchanged from a month ago at 58 MMT, and dropped Ukraine 2 MMT to 25 MMT. Separately, Agritel lowered their corn forecast for Ukraine to below 23 MMT.

The USDA also raised their forecast for this year's EU-28 barley crop, up 1.2 MMT to 59.8 MMT, although exports of the grain were left unchanged at 7 MMT this season. Brussels have already approved more than half that total (3.7 MMT) for export.

In other news, Defra estimated the size of this year's UK wheat crop at 16.13 MMT compared to yesterday's NFU forecast of 16.68 MMT. The Defra number would still be the fourth largest crop in history, and would also be the first time that the UK has produced a crop in excess of 16 MMT in two years in succession.

Defra now see this year's UK barley crop at 7.28 MMT - the largest since 1997.

Across the Channel, FranceAgriMer said that the 2015 French corn harvest was 22% complete as of Monday, up from 9% the previous week and versus only 6% done this time a year ago.

French winter wheat planting was put at 23% complete, up from only 3% a week previously and versus 20% sown this time last year. Winter barley planting jumped to 37% complete from only 3% done a week ago and is now 1 point ahead of last year.

Winter wheat areas of Russia and Ukraine remain dry, and the weather forecast is suddenly much colder than normal too across the weekend and through until Tuesday. After that temperatures return to normal and are then seen trending to above normal by next weekend (Oct 17).