Nogger's Blog

11/12/15 -- EU grains closed little changed on the day and for the week, with Wednesday's WASDE report from the USDA proving to be a bit of a non-event.

At the close, Jan 16 London wheat was up GBP0.15/tonne at GBP112.70/tonne. In Paris, Mar 16 wheat was down EUR1.25/tonne to EUR176.25/tonne, Jan 16 corn was EUR0.50/tonne lower at EUR164.50/tonne and Feb 16 rapeseed had fallen EUR1.25/tonne to EUR379.25/tonne.

For the week that puts London wheat a pound higher, with Paris wheat up EUR3.25/tonne, corn down EUR0.75/tonne and rapeseed EUR1.75/tonne easier.

It is probably prudent at this stage to start monitoring the old crop/new crop premiums on a weekly basis too. In London the Jan 16/Nov 16 differential is GBP11.55/tonight, or 10.25%. In Paris the Jan 16/Dec 16 differential is EUR11.75/tonne, or 6.67%.

Brussels confirmed 563 TMT worth of soft wheat export licences this past week, down sharply (-46%) from just over 1 MMT a week ago - although that was the best week of the season. The USDA revised down their expectation for EU wheat exports this season on Wednesday, so it will be important to keep an eye on these from hereon in.

Cumulative soft wheat exports so far this season are now 10.3 MMT, some 22% below where there were this time a year ago. Less than a month ago though season to date exports were running more than 30% down compared with 12 months previously, so things are improving. Even with this week's lower figure factored in though the USDA still only see exports down 8.2% year-on-year at the end of the current season.

France accounted for 35% of this past week's exports versus 46% the previous week. Corn import licences meanwhile were 383 667 MT last week, up 24% from a week ago, and now total 5.1 MMT for the season so far.

Talk that an expanding bird flu outbreak in France could be starting to harm feed demand leans a bit bearish too. Five regions of the country are now known to have the disease - the first confirmed ones in 8 years.

FranceAgriMer reported French winter wheat and barley crop conditions at 98% and 97% good to very good respectively today. High numbers, although unchanged on a week ago. They have 57% of the French winter wheat crop at the early tillering stage versus 44% last week and 55% a year ago. Winter barley is 77% tillering versus 66% last week and 75% a year ago.

Coceral released their latest EU crop production forecasts, placing the soft wheat crop here at a record 150.3 MMT, up 1.2% from 148.5 MMT a year ago. They see barley output at 61.1 MMT, up marginally on 60.2 MMT in 2014/15. Corn production is seen 22% lower at 58.5 MMT, and the OSR crop is estimated down 12% at 21.5 MMT.

In the UK specifically, they put the wheat crop at 16.17 MMT versus 16.55 MMT a year ago. Barley output is forecast at 7.28 MMT versus 7.01 MMT and rapeseed production estimated at 2.32 MMT against 2.51 MMT 12 months ago.

The bottom line is that the EU needs to pick up more wheat export business - and quickly - if it wants to avoid another season of large carryover stocks heading into what (at this stage) looks like another bumper production year based on current plantings and robust crop condition estima.

Algeria were said to have bought around 500-600,000 MT of optional origin wheat, at least some of which should herald from France, although there's also talk of Argentine origin material maybe standing the chance of a look-in now that they are looking to clear some of their carryover stocks following the recent change in leadership there.

Oil World estimate EU-28 rapeseed imports at 3.2 MMT in 2015/16, up nearly 25% on a year ago, due to lower domestic production. Australia is seen being the top supplier with 1.4 MMT of that total.