EU Grains Closing Comments

30/06/16 -- EU grains traded mixed with thinly-traded Jul 16 London wheat closing up GBP3.00/tonne at GBP112.00/tonne, whilst new crop Nov 16 was GBP0.10/tonne lower at GBP120.50/tonne. Sep 16 Paris wheat traded down EUR1.00/tonne at EUR155.75/tonne, Aug corn was EUR3.50/tonne lower at EUR173.25/tonne and Aug 16 Paris rapeseed was EUR2.00/tonne higher at EUR360.50/tonne.

Coceral raised their estimate for the size of this year's EU-28 soft wheat crop from 145.2 MMT To 148.01 MMT, down 1.35% from last year's 150.33 MMT. They also upped the ante on barley from the 59.07 MMT predicted in March to 63.27 MMT, some 3.5% more than a year ago.

For corn they see production rising 6.56% this year to 62.36 MMT, ad OSR output up a little from 21.74 MMT To 22.00 MMT.

So, increased barley production outweighs the decline in wheat output, and if the scenario of a deluge of feed only grade barley comes to pass that the HGCA were talking about yesterday then it's not too difficult to see why there's a GBP16/tonne differential between new crop feed wheat and barley.

If that comes true, then it paints a picture of lacklustre demand for feed wheat from the compound and livestock sector come harvest-time as they all switch into much cheaper barley.

In the UK Coceral see wheat production at 15.18 MMT, down 6.1% on a combination of lower plantings (1.827 million ha) and reduced yields (8.31 MT/ha). Barley production here is forecast at 7.15 MMT (7.28 MMT in 2015) and OSR output at 2.15 MMT (2.55 MMT).

On the continent they have French soft wheat at 38.87 MMT (down 3.6%) and the German crop at 26.11 (26.45 MMT last year). A sharp 23.5% increase is seen coming from the UK's largest export home of Spain (6.42 MMT versus 5.20 MMT).

Spain's barley crop meanwhile will leap 40.6% to 9.04 MMT this year they suggest.

No great changes are forecast coming on OSR output from Europe's top two producers, France (5.21 MMT vs. 5.27 MMT) and Germany (5.35 MMT vs. 5.02 MMT).

Corn production will be higher in both though, with France up 4.1% to 13.67 MMT and Germany seen 17% higher at 4.46 MMT.

In other news the Russian Ag Min forecast a 2016 grain crop of 106-110 MMT (104.8 MMT last year), including "more than 60 MMT" of wheat (61.79 MMT last year).

Tunisia were reported to have bought 100,000 MT of soft wheat at $177.25-178.77/tonne C&F, along with 75,000 MT of feed barley at $161.55-165.82/tonne C&F. Morocco are in for 133,000 MT of optional origin soft milling wheat.