EU Grains Mixed, Wheat Rises On Germany Downgrades

16/08/16 -- EU grains closed mixed, wheat was mostly firmer, with London wheat marching on to new highs.

The day ended with benchmark Nov 16 GBP0.75/tonne higher at GBP131.65/tonne. Sep 16 Paris wheat traded up EUR0.75/tonne at EUR163.25/tonne, Aug corn was unchanged at EUR166.50/tonne and Nov 16 Paris rapeseed was EUR2.25/tonne lower at EUR373.50/tonne.

The EU wheat crop keeps shrinking. This time it was Germany's turn to take a knock with the German Agri Cooperatives Association DRV cutting their forecast for 2016 grain production there from 44.7 MMT to 44.9 MMT due to "significantly lower estimated yields per hectare for all cereals. This year's result is more than 8 percent below last year's value," they said.

"Reason for the disappointing results are in particular the adverse weather conditions in recent months. While the corn has suffered mainly in the western and southwestern parts of the country under heavy rain, it was too dry partially in the north and northeast," they observed.

Wheat production was forecast at 24.2 MMT versus 25.4 MMT previously and some 9% below last year.

Winter barley production is seen down more than 9% at 8.8 MMT and spring barley output declining by almost 9% to 1.8 MMT.

Corn production is seen at only 4 MMT versus 4.5 MMT previously and the rapeseed harvest, which is largely complete, forecast at 4.5 MMT versus 4.9 MMT last month and 11% below 2015. "The oil contents are slightly lower than the previous year," they added.

Agritel said that the French wheat harvest should now be about 80% done and fine and dry weather in Germany will allow significant harvest advancement to be made this week.

Saudo Arabia bought 640,000 MT in a 12.5% hard wheat tender.

IKAR raised their estimate for the Russian grain harvest by 2 MMT to 116 MMT, upping wheat from 69 MMT to 70 MMT, noting the possibility for further increases. The USDA forecast wheat production in Russia at 72 MMT on Friday.

The Russian Ag Ministry say that the 2015 wheat harvest is only just past halfway through (50.9% done) producing a crop of 51.7 MMT already, so these estimates do seem a little low even if they are of a record magnitude and we allow for the bulk of what is yet to be harvested to be lower yielding spring wheat.

The trade debates the sharply improved results out of Russia, and their ability to export large quantities of this wheat successfully to the foreign market when it requires it, especially in the depths of the Russian winter.