EU Grains: Lower Domestic Production Outweighed By FSU Gains

12/07/16 -- EU grains finished the day mostly with little change. Lower production estimates in Europe are outweighed by improved prospects in the FSU.

At the close Jul 16 London wheat was unchanged at GBP111.75/tonne. Sep 16 Paris wheat closed also unchanged at EUR161.00/tonne, Aug 16 corn was down EUR0.50/tonne at EUR171.25/tonne and Aug 16 rapeseed was up EUR0.50/tonne at EUR354.75/tonne.

Ukraine said that it's early grain harvest was 19% complete on 1.75 million ha producing a crop of 6.08 MMT to date. Yields are up 12.7% at 3.47 MT/ha.

That total includes 2.52 MMT of wheat (3.67 MT/ha) and 3.32 MMT of barley (3.36 MT/ha). In addition growers there have harvested 249 TMT of rapeseed off 102k ha with an average yield of 2.44 MT/ha.

The Ukraine Oilseeds Association estimated sunflower production there at 12-13 MMT, am 8-17% increase on 11.1 MMT a year ago. UkrAgroConsult yesterday said that oilseed crops there are in good condition following recent rains.

SovEcon raised their forecast for the Russian wheat crop to 66.1 MMT from 64.4 MMT previously. IKAR yesterday reported that Russian wheat prices were at 7-year lows following good early yield results and a sudden strengthening of the rouble.

Russian exports have been slow to get going so far, despite good new crop harvest progress. Perhaps low domestic prices and trader speculation that the government will abolish the current export duty on wheat at the end of the month.

Egypt tendered for wheat for Aug 10-20 shipment in their first foray into new crop.

They finished up buying two cargoes of Russian wheat and one of Ukraine origin. No French wheat was offered. The prices paid were in the region of $172-173.50/tonne FOB.

The French Ministry pegged 2016 wheat yields there at only 7.07 MT/ha versus 7.98 MT/ha a year ago. They see production at 36.95 MMT, a near 10% drop on a year ago following rainfall 38% above normal levels.

ODA went even lower, cutting last week's 35 MMT estimate to just 32 MMT, a nine year low.