EU Grains Consolidate Despite More Negative Estimates On France

Posted by Nogger - a legend in his own mind at 10:15 | Categorized as

27/07/16 -- EU grains finished mostly a touch lower, with wheat in particular consolidating from recent gains.

The day ended with Nov 16 London down GBP0.55/tonne at GBP123.75/tonne, Sep 16 Paris wheat was EUR2.50/tonne lower at EUR163.75/tonne, Aug corn was down EUR0.25/tonne at EUR169.75/tonne and Aug 16 rapeseed was up EUR1.50/tonne to EUR358.00/tonne.

The jury is still out as to exactly how bad the French wheat crop is. CRM AgriCommodities today released an average yield estimate for France of only 5.5 MT/ha, a 30-year low. Using the Ag Ministry's own area estimate of 5.22 million ha, that would give us a final production figure of only 28.71 MMT - and that is assuming that everything gets cut and doesn't go for whole crop silage or similar.

The yield figure of 5.5 MT/ha is well below the 7.23 MT/ha served up to us by MARS earlier in the week. ODA suggested production "below 30 MMT this week and Agritel say 30-32 MMT.

The official French Ministry estimate of 37 MMT was only released as recently as Jul 12. Production last year was officially 40.7 MMT, so these private numbers are suggesting a drop of 8.7-12 MMT this year, or 21-29%.

Either way, large carryover stocks from 2015/16 suddenly don't seem so important, they are in fact necessary. The uncertainty will no doubt have been a factor in the lack of French offers at the two recent Egyptian tenders.

If we switch our attention to the UK now, MARS came up with an average wheat yield of 8.09 MT/ha for us this year in this week's report. Multiplying that out by 1.794 for the GB wheat area from the HGCA gives a 2016 wheat crop of 14.5 MMT against 16.44 MMT last year - down 11.8%.

For OSR, the HGCA have a England & Scotland OSR area of 591k ha, add on another 5k ha for Wales (the area planted in 2014 and 2015) and multiply up by a MARS average yield of 3.17 MT/ha this year and we get a 2016 UK OSR crop of 1.89 MMT.

Note that early yields OSR and barley in the UK are so far said to be pretty disappointing and it looks like the MARS yield figures could be a bit overstated. MARS said themselves that there is "a high margin of uncertainty in our yield forecasts" for the UK this year.

So the French wheat crop could be 12 MMT down on a year ago, and the UK may have lost another 2.0-2.5 MMT, with Germany expected down a similar amount. Interesting, especially come the second half of the season once cheap FSU offers start drying up.

UKraine said that their early grain harvest was 69% complete on 3.69 million ha for a crop of 24.79 MMT to date. That includes 16.61 MMT of wheat off 68% of plan. They've also harvested 7.39 MMT of barley off 78% of plan and 81% of their OSR for a crop of 962 TMT so far.