Paris Wheat Closes At Best Levels Of 2016

22/07/16 -- EU grains finished mostly higher on the day, with yet another wheat crop downgrade coming in from FranceAgriMer. The EU market continues to be pulled one way by the demise of the French crop, and another by likely bumper production from Ukraine and Russia again this year. The former won the day today.

The day ended with new front month Nov 16 London up GBP2.05/tonne at GBP126.05/tonne, Sep 16 Paris wheat was EUR7.00/tonne higher at EUR174.00/tonne, Aug corn was up EUR2.25/tonne at EUR171.50/tonne and Aug 16 rapeseed fell EUR6.25/tonne to EUR357.75/tonne.

For Paris wheat this was the highest front month close of 2016 so far following the news that ODA had downgraded their French wheat crop estimate this year by 3 MMT to 32 MMT. Production was almost 41 MMT a year ago, so we're looking at a near 22% decline, and the lowest output since 2007 here.

FranceAgriMer backed-up the downgrade by dropping it's estimate for the proportion of the crop rated good to very good by 7 percentage points to just 42% (76% a year ago). They said that harvesting of French wheat was 17% complete versus 7% last week and 53% this time last year.

The French winter barley crop was seen at 42% good to very good, down 2 points and well below 86% this time last year. Harvesting of that is 95% complete. Spring barley was put at 60% G/VG from 62% last week and 64% last year. Harvesting of that crop is 7% done versus 3% last week and 38% last year.

The French corn crop was seen unchanged at 69% G/VG (62% last year), and silking is at 13% (3% last week and 73% last year).

RusAgroTrans lowered their forecast for Russia's July grain exports from 2.5 MMT to 2.0 MMT. The revision is a result of reduced demand from Turkey and some trader/grower reluctance ahead of the anticipated removal of the export tax on wheat at the end of this month.

The Russian Ag Min say that this year's wheat harvest now stands at 28.1 MMT of 6.7 million ha. Yields are averaging 4.17 MT/ha versus 3.79 MT/ha a year ago. They've also harvested 3.6 MMT of barley.

Ukraine say that they've harvested 61% of the planned early grains area (or 5.88 million ha) for a crop of 21.34 MMT to date. Wheat accounts for 3.554 million ha (57% of plan) for a crop of 13.8 MMT so far. Barley adds another 6.83 MMT off 73% of plan.

They say that they've already exported 1.443 MMT of grains so far this new season, including 760,000 MT of barley, 297,000 MT of wheat and 386,000 MT of corn.