31/05/12 -- EU grains finished mixed with Jul 12 London wheat down GBP1.50/tonne to GBP171.60/tonne, and with new crop Nov 12 unchanged at GBP155.15/tone. Nov 12 Paris wheat was up EUR0.75/tonne to EUR211.50/tonne.
For the month of May that places Jul 12 London wheat GBP6.40/tonne lower and Nov 12 down a much more modest GBP0.85/tonne. Nov Paris wheat is EUR7.75/tonne higher on the month, much of that due to acute euro weakness.
As the 2011/12 marketing year draws to a close Brussels granted 178 TMT of soft wheat export licences this week, bringing this season's campaign total to a fairly poor 12.0 MMT, 32% down on the 17.7 MMT exported at the same point last season with just four weeks left to go.
So, despite the euro falling to a near two year low against the US dollar, EU wheat isn't exactly flying off the shelves.
EU 2012/13 production prospects have improved considerably in the past couple of months, although eastern Germany, Poland, Slovakia and the Czech Republic could do with some of the recent rainfall that western Europe has been enjoying recently.
Ukraine has also benefited from recent rainfall, with the Ag Ministry there today saying that they could have a grain harvest as high as 50 MMT this year - their third-largest harvest in the past 20 years.
Record corn production could be on the cards once again, with a crop of 26-27 MMT possible. Despite a slump in wheat prospects to 12.0-12.5 MMT this year from 22.3 MMT in 2011, large carryover stocks mean that they could still export a record volume of grain in the 2012/13 season, including 14-15 MMT of corn, 5 MMT of wheat and 2.5-3.0 MMT of barley.
Export duties imposed in the first four months of the 2011/12 season mean that Ukraine's carryover grain stocks into the new season will be 11-12 MMT, far higher than the normal 3-5 MMT of ending inventories, the Ministry estimate.
Russia's production prospects have also improved with "drought-breaking" rains arriving for many areas of European Russia, according to Martell Crop Projections.
30/05/12 -- EU grains finished mostly lower with Jul 12 London wheat down GBP0.90/tonne to GBP173.10/tonne, and new crop Nov 12 falling GBP0.60/tonne to close at GBP155.15/tonne. Aug 12 Paris wheat was down EUR4.75/tonne to EUR2108.00/tonne, whilst Nov 12 was EUR0.75/tonne lower at EUR210.75/tonne.
Outside markets were very soft, contributing to today's weakness, with crude oil around USD3.00/barrel lower at the close of play in Europe, meaning that Brent has lost around 13% so far this month and NYMEX even more - in the region of 17% easier.
The Spanish stock market fell to its lowest levels in 9 years and borrowing costs there rose to around 6.5% on heightened banking concerns.
In a move akin to a vote of confidence from the board of directors for a Premiership football manager the Spanish PM insisted that they will definitely not need a Troika bailout - where have we heard that one before?
Ireland, Greece, Portugal...
The euro slumped to its worst against the US dollar since July 2010.
Asian millers say that they will switch from wheat to corn for animal feed for the first time in over a year. South Korea bought 346 TMT of corn today and Japan has bought 500 TMT of South American origin corn this month.
Rain in Ukraine has improved crop prospects there, whilst things are even looking up in Russia. The president of the Grain Union there said today that this year's wheat harvest will be roughly equal to last year at 56 MMT, despite drought pessimism. Wheat exports in 2012/12 meanwhile will reach 22-23 MMT, he said - well above the 18 MMT currently projected by the USDA.
Rains and cooler temperatures are in the forecast for the US Midwest today through to Friday. The USDA last night reported spring wheat crop conditions jumping five percentage points to 79% good/excellent.
After 6-10 days of warm and sunny weather, things are forecast to turn cooler and wetter across much of the UK by the second half of the long holiday weekend at the latest. Crops here are will appreciate that and are looking excellent.
29/05/12 -- EU grains finished generally lower with Jul 12 London wheat ending down GBP3.00/tonne to GBP174.00/tonne, and new crop Nov 12 falling GBP3.25/tonne to close at GBP155.75/tonne. Aug 12 Paris wheat was unchanged for the seventh straight session at EUR212.75/tonne, whilst Nov 12 was EUR4.50/tonne lower at EUR211.50/tonne.
Wheat was modestly lower for most of the morning, but those losses picked up later in the afternoon when Chicago opened and wheat there came under instant pressure.
The winter wheat harvest in Kansas is now well underway, and early indications are that yields are generally better than expected/recently feared.
Rain relief has arrived for Ukraine, with generally good coverage across parched areas to the south and east. The Ministry there now say that their grain harvest could now amount to 47.2 MMT, possibly as high as 48 MMT, given the recent improvement in the weather.
Their 2012/13 grain exports are estimated at 22.5 MMT, a large proportion of which is expected to be corn. Indeed they may well become the world's second largest corn exporter after the US in the season ahead.
Russia's spring grain plantings are now estimated at 90% complete. Some sporadic rain has fallen in southern districts, but more would be helpful.
The EU Commission's crop-monitoring unit, MARS, tweaked their 2012 EU grain production estimates today, pegging the EU-27 wheat yield at 5.34 MT/ha, marginally down on last year although 0.7% above the five year average. UK yields were estimated at 8.18 MT/ha, 5.6% up on last year.
EU-27 barley yields are seen at 4.43MT/ha, 2.8% up on last year, with yields here in the UK rising 1.7% to 5.6 MT/ha. EU-27 rapeseed yields are seen rising slightly to 2.87 MT/ha, although the UK will suffer a drop of 14.5% from last year's record to 3.34 MT/ha, they add.
The EU Commission estimate all wheat production in the bloc at 134.6 MMT, 2 MMT down on last year but 2.6 MMT above the USDA's recent forecast. EU-27 rapeseed output will only be marginally down from 19.3 MMT to 19.2 MMT, they estimate. That is also well above other analysts estimates in the 17.5-18.0 MMT area.
This year's barley crop will total 55.4 MMT, 1.8 MMT above the USDA's May estimate and a 3.9 MMT increase on last year, they add.
28/05/12 -- EU grains finished mixed but mostly a little lower on the day with Jul 12 London wheat up GBP2.00/tonne to GBP177.00/tonne, and with new crop Nov 12 down GBP0.50/tonne to GBP159.00/tone. Nov 12 Paris wheat was down EUR0.50/tonne to EUR216.00/tonne.
It was a very quiet day with the US and much of the continent closed for our traditional public holiday which has been delayed to coincide with the Queen's Jubilee celebrations next week.
Mixed reports continue to come out of Russia and Ukraine. The Ukraine national weather centre say that the winter grain harvest there will be 43% down on last year at 14.5 MMT, with winter wheat yields likely to average 2.6 MT/ha - that's a near 22% decline on last season, although marginally better than the 2.45 MT/ha that the USDA predict.
The Ukraine Ag Ministry meanwhile say that crop conditions have improved on the back of recent rains and they now rate 71.5% of the winter wheat crop as good/satisfactory.
Russia appears to have had scattered, buy heavy in some places, rains in recent days.
In Kazakhstan meanwhile spring grain planting is more than three quarters complete.
Crops in the UK, France and western Germany will be benefiting from the recent warmth after a good soaking in April and early May, although the eastern half of Germany and Poland are said to be too dry.
25/05/12 -- EU grains finished mostly higher with Jul 12 London wheat up GBP1.00/tonne to GBP175.00/tonne, Nov 12 London wheat was GBP1.50/onne higher at GBP159.50/tonne. Aug 12 Paris wheat was unchanged at EUR212.75/tonne, whilst Nov 12 was up EUR3.75/tonne to EUR216.50/tonne.
For Nov 12 Paris wheat this was the highest close on the weekly chart in almost 12 months.
On the week as a whole Nov 12 London wheat gained GBP1.50/tonne and Nov 12 Paris wheat EUR1.25/tonne.
Drought, particularly in Russia, Ukraine and the US is making the headlines and supporting the market.
The Euro was back under renewed pressure after Spain's fourth-largest bank, Bankia, asked the government there for a EUR19 billion bailout and said that it in fact made a EUR2.98 billion loss in 2011 rather than the EUR309 million profit it announced in February.
The weak euro should support wheat prices on the continent where the same warm and dry weather that we are currently experiencing in the UK is also prevailing in France and Germany. As with here, this should be largely beneficial to crops after a cool and wet April and early May, although it may not be too long before some are saying it's too hot and too dry here as well.
In the UK most crops are looking magnificent and appear to be growing before your eyes now that they finally have some much-needed heat units.
Corn planting in France is said to be 93% complete by FranceAgriMer, with emergence running at 76%.
Brussels only issued 84,0162 MT of soft wheat export licences this week as the marketing year end nears - the lowest volume in 14 weeks. That brings total year to date exports to a rather disappointing 11.85 MMT.
The US and much of Europe, including France and Germany, will be closed for a public holiday on Monday.
Point of interest: A year ago today drought talk was all the rage in the UK, France, Germany, Ukraine and Russia. The first winter barley was cut in the Charantes area of France on 24th May 2011, with resulting yields described at "catastrophic". Yields there finally averaged 5.7 MT/ha, around the same as here in the UK.
24/05/12 -- EU grains finished mostly higher with Jul 12 London wheat ending up GBP0.25/tonne to GBP174.00/tonne, and new crop Nov 12 up GBP1.85/tonne to close at GBP158.00/tonne. Aug 12 Paris wheat was unchanged at EUR212.75/tonne, whilst Nov 12 was EUR0.75/tonne firmer at EUR212.75/tonne.
Reports of heavy overnight rain in southern and eastern Ukraine should help wheat crops there. The south of Russia is apparently seeing more scattered showers, and although crop production estimates here are being trimmed most local analysts agree that this is not a repeat of 2010 - at least not yet.
The Russian Grain Union says that the 2012/13 grain harvest will “at least" match last year’s 94 MMT, with wheat production at "at least" 56 MMT. SovEcon have trimmed their estimate slightly to 87m-91 MMT from 87m-93 MMT.
The International Grains Council have cut their 2012/13 world wheat production estimate by 5 MMT from last month to 671 MMT, 3.5% down on last year. World ending stocks are seen falling 15 MMT, or 7.3% from last month to 191 MMT - although this is still more than three month's usage.
World corn production on the other hand is seen rising to an all time record 913 MT, 13 MMT up on last month's estimate and 47 MMT more than global output last year.
"Early seeding has reinforced expectations for a huge US harvest. Assuming a significant rise in harvested area, and with yields forecast to match the 10-year trend, US production is projected at 355 MMT, up by 13% year-on-year," they said.
Meanwhile corn production in Ukraine this year is pegged at around 23.0-25.5 MMT by an assortment of local groups, around half of the country's total cereal harvest - a much larger share than we have seen from them before and one that could propel them to be the world's second largest exporter after the US in the coming season.
It would seem that wheat's misfortune is going to be corn's gain in 2012.
In other news, the UK is technically in a double dip recession, according to the latest figures from the Office for National Statistics.
23/05/12 -- EU grains finished mostly lower on the day with May 12 London wheat thankfully going off the board unchanged and untraded at GBP175.75/tonne, and with new crop Nov 12 down GBP2.65/tonne higher to GBP156.15/tone. Nov 12 Paris wheat was down EUR2.50/tonne to EUR212.00/tonne.
Outside influences weighed on the market with European leaders meeting to discuss the Greek situation and how to stimulate growth. NYMEX crude fell below USD90/barrel to it's lowest levels in almost seven months, whilst the FTSE100, Dax & Cac 40 all posted declines of around 2.5% as confidence in a credible solution to the crisis waned. The euro fell to its lowest level against the US dollar since August 2010 today.
US wheat and soybeans also fell sharply, although corn did a reasonable job of bucking the trend.
Rain of varying degrees of intensity and confidence are in the forecasts for some of the driest parts of the wheat world in the week ahead.
Following last week's steep price rally for US wheat there is talk of Asian buyers, who had been booking cheap Australian and other origin wheat switching back into corn now that it is the cheaper grain for the first time in some while. East Asian countries import more than 30 MMT of wheat and 37 MMT of corn every year, around 50% of which is used for animal feed.
A report out from the HGCA today says that no significant wheat usage is forecast for either Ensus or Vivergo this season "as one is currently out of production and the new plant at Hull is not expected to be online until the summer."
UK wheat closing stocks for the current 2011/12 season are forecast to at 1.53 MMT, similar to 2010/11 whilst remaining at historically low levels. Wheat exports are estimated at 2.45 MMT, 8% lower than 2010/11, they add.
Domestic cereal crops out in the field are generally looking in very good shape, far better than this time last year, auguring well for decent yields come harvest time.
Paris Nov 12 wheat hit 11-month highs on Monday, prompting some new crop selling amongst French farmers. Reports suggest that good volumes of old crop wheat are coming out of the woodwork in Poland. Heavy rains there last week have been replaced by warm temperatures and plenty of sunshine this week - excellent growing conditions.
22/05/12 -- EU grains finished mostly lower although technical and very thin May 12 London wheat, which expires tomorrow, closed up GBP0.25/tonne at GBP175.75/tonne. Nov 12 London wheat fell GBP1.65/onne to GBP158.80/tonne. Aug 12 Paris wheat was unchanged at EUR212.75/tonne, whilst Nov 12 was down EUR2.00/tonne to EUR214.50/tonne.
It was a bit of a "turnaround Tuesday" with Chicago grains falling quite sharply, dragging Europe lower in sympathy.
Much needed rain in eastern Ukraine and Russia may arrive just in time to save ailing wheat crops there.
"Very dry conditions began around a month ago in southern Russia, where 28% of the national wheat harvest is produced. The stressful dry spring conditions developed on top of winterkill losses in Krasnodar. This is one of the 4 key wheat growing areas in the Southern District, where no rain has occurred for over a month. Very extreme heat made drought stress worse, temperatures 10-20 F above normal. Maximum temperatures in the upper 80s F and low 90s F have frequently developed, highly unusual at 45-48 N latitude," say Martell Crop Projections.
"The strong ridge of high pressure responsible for weather stress is expected to move east into Kazakhstan, Siberia and Urals in the coming days. Near normal temperatures would resume in Russia and Ukraine, along with a chance for heavy, soaking rain. Southern Russia is expecting very heavy rain in Krasnodar, Stavropol and Rostov - perhaps up to 2 inches.
"Yet drought and heat stress would develop in Russia's eastern grain belt. Siberia and Urals would be subject to stressful growing conditions, though it appears the heat would be less intense. The ridge of high pressure would weaken somewhat. The eastern Russia grain belt is less important to bottom line grain production, Siberia and Urals contributing just 30% to the national grain harvest, compared with 70% from European Russia," they say.
Meanwhile Ukraine has received generous rainfall in scattered showers over the past 10 days. Some areas like Kryvyi Rih, a key wheat area in eastern Ukraine, have caught up to normal with the recent rains entirely wiping out spring drought, they add.
21/05/12 -- EU grains finished mixed but mostly higher with May 12 London wheat ending up GBP0.50/tonne to GBP175.50/tonne, and new crop Nov 12 up GBP1.65/tonne to close at GBP160.45/tonne. Aug 12 Paris wheat fell EUR0.25/tonne to EUR212.75/tonne, whilst Nov 12 was EUR1.25/tonne firmer at EUR216.50/tonne.
It was a very choppy session in which London and Paris wheat both opened sharply higher, following the lead of wheat on the electronic Globex market, but then quickly capitulated mid-morning before staging a fightback in afternoon trade.
Nov 12 London wheat had a GBP4.50/tonne trading range on the day, with Paris wheat fluctuating within an EUR8.00/tonne range.
Forecasts for perhaps as much as an inch of rain for hot and dry southern Russia were responsible for tempering early gains, although there is some disagreement over how much rain will be left in storms originating in Central Europe by the time they reach Russia. Eastern Ukraine though should at least get some benefit en-route.
Even so, Ukraine's winter wheat output is now pegged at 10-12 MMT, around half of the 22.3 MMT they produced last year.
Russia's spring planting campaign is around two thirds complete, whilst Ukraine's is almost done according to their respective Ag Ministry's.
The German Statistical Office say that the country's farmers will harvest a 9.5% lower wheat area than they did a year ago, along with 8% fewer barley acres. Winter losses mean that German spring barley plantings are up almost 30% this year, with the spring wheat area jumping more than 180%, although the amount of land given over to the latter is still rather insignificant.
Rabobank are forecasting Paris wheat futures to average EUR200/tonne in Q2, EUR190/tonne in Q3 and EUR180/tonne in Q4 of 2012. Whist those prices are higher than their previous estimates they are all well below current levels.
UK weather conditions are seen improving this week, with temperatures of 25C on the cards by the middle of the week in many places, apart from down the east coast. It will certainly do the crop here plenty of good to get some sun on its back.
Similar could be said of France too, which has had its winter moisture deficit fully restored in the past six weeks.
It's been a quiet start to the week on the Greek crisis front, but trouble is never far away from that quarter it would seem. The pound is off last week's 3 1/2 year highs against the single currency, but a push back up above the 1.25 level seems likely and could come at any time.
18/05/12 -- EU grains finished higher with May 12 London wheat ending up GBP1.00/tonne at GBP175.00/tonne, new crop Nov 12 was GBP5.00/tonne higher to GBP158.80/tone. Nov 12 Paris wheat was up EUR8.25/tonne to EUR215.25/tonne.
On the week as a whole May 12 London wheat gained GBP2.50/tonne whilst Nov 12 added an impressive GBP10.60/tonne to close at its highest in more than six weeks. Nov 12 Paris wheat was EUR19.00/tonne higher on the week, closing at it's best levels in eleven months.
The second successive sharp monthly reduction to EU-27 wheat production prospects from Strategie Grains, and talk of potentially serious problems developing for Russian wheat unless rain arrives soon, were behind this week's rises.
Winter kill losses in France, Germany and Poland are said to have been heavier than realised, according to Strategie Grains. What has survived the winter appears to be in decent shape in France at least where FranceAgriMer now rate 67% of the wheat crop in good/excellent condition, up from 65% a week ago.
Wheat appears to have done a exceptionally good job of shrugging off outside market influences this week, with Brent and NYMEX crude both slumping to their lowest levels of the year so far on the back of the ongoing European debt crisis.
Euro weakness is seen remaining, which should at least help to support Paris wheat. Soft wheat exports out of Rouen more than doubled to 123,400 MT this week, helped by shipments of more that 75,000 MT to Algeria.
Chicago wheat gained more than a dollar a bushel, around 17%, this week - way outperforming corn and soybeans. Dryness concerns also exist here, particularly in the top producing state of Kansas where the USDA cut good/excellent ratings by eight percentage points on Monday.
17/05/12 -- EU grains finished higher with May 12 London wheat closing up GBP1.00/tonne to GBP174.00/tonne, and Nov 12 rising GBP1.80/onne to GBP153.80/tonne. Aug 12 Paris wheat was up EUR3.75/tonne at EUR205.00/tonne and new crop Nov 12 was also up EUR3.75/tonne to EUR1207.00/tonne.
A leaked report last night suggesting that Strategie Grain would cut it's EU-27 soft wheat production estimate by 4.2 MMT to 122.7 MMT proved to be correct. The losses are mainly accounted for by much worse winter kill damage in February than had earlier been anticipated, they said.
The reduction means that the French analysts have lopped 8.5 MMT off their forecasts for EU-27 soft wheat output in the last two months alone, and this latest figure now represents an cut of 10.3 MMT on their original assessment of thia year's potential and a 5% drop on last season's production.
Germany (down 1.6MMT), Poland (down 1.4 MMT) and France (down 0.6 MMT) were the main countries responsible for the downgrade.
It wasn't all bullish news from them however. They cut their 2011/12 and 2012/13 soft wheat export forecasts too, reflecting a lack of competitiveness against other origins like the US, the Black Sea and South America. For the 2012/13 season soft wheat export of only 11.4 MMT are amongst the lowest in the last thirty years.
Concerns over Russian and Ukraine wheat production potential this year are also grabbing the headlines, although analysts on the ground paint a less disastrous picture. There's some talk also of US wheat prospects declining due to dryness.
The Eurozone crisis still weighs on the market however, and that is potentially what could still bring the grain market to it's knees no matter what the fundamentals say.
Many are now talking of a Greek exit as being almost inevitable. Greece’s benchmark ASE Stock Index fell to it's lowest level since 1990 today. Greek nationals are reported to be syphoning off large sums of money from their own banks to be deposited abroad. If and when they do depart the immediate concern will be who is next, and that could mean a possible run on Portuguese, Spanish and Italian banks too.
16/05/12 -- EU grains finished mixed but mostly higher with May 12 London wheat ending down GBP0.50/tonne to GBP173.00/tonne, and new crop Nov 12 up GBP2.70/tonne to close at GBP152.00/tonne. Aug 12 Paris wheat ended EUR3.75/tonne higher at EUR201.25/tonne, whilst Nov 12 was also EUR3.75/tonne firmer at EUR203.25/tonne.
Wheat was mixed throughout the morning, but headed higher in afternoon trade after the Chicago market came in stronger. That push higher was linked to reports of potential crop damage in Russia due to high temperatures and scant rainfall.
There is some trade talk of similar problems in Ukraine, although several commentators on the ground over there refer to crop conditions bordering on "perfect" - at least in the west of the country.
US wheat ratings in the top producing state of Kansas were downgraded sharply by the USDA on Monday, no doubt raising a few eyebrows amongst the heavily short fund fraternity.
A late and unconfirmed story appearing via Twitter that Strategie Grains will tomorrow cut it's EU-27 soft wheat production forecast by more than 4 MMT to 122.7 MMT may have been behind the strength in new crop months.
They cut their soft wheat estimate last month by a chunky 4.3 MMT to 126.8 MMT citing frost and drought damage, so this potentially pegs things well below what the market was expecting just a couple of months ago.
Iraq bought 400,000 MT of wheat of various origins, said to be a combination of Russian, Romanian, Kazakh, Australian and US wheat in a tender yesterday, adding support.
European debt worries appear to have been placed on the back burner, at least for today, but don't be surprised to see them retake centre stage at any time.
Meanwhile UK wheat exports in March slumped to a nine month low of less than 125 TMT customs data shows, and that was with the added bonus of a 47 TMT consignment shipped to the US. The latter is thought to have been sold around eight months or so ago, UK wheat is currently priced out of the export market and looks likely to remain so now until new crop comes along.
15/05/12 -- EU grains finished mostly higher with May 12 London wheat ending unchanged at GBP173.50/tonne, new crop Nov 12 was up GBP1.60/tonne to GBP149.30/tone. Nov 12 Paris wheat was up EUR4.00/tonne to EUR199.50/tonne.
After a couple of risk off day the market was perhaps due some kind of correction. Greek concerns haven't gone away though, with the pound rising to a new 3 1/2 year high of 1.2560 against the euro today. That perhaps explains why Paris wheat posted better gains than London wheat today.
The market is thin and looking for direction, it's been two months since London wheat has closed outside the GBP170's on a front month.
Dry and warm weather in parts of China, Russia, Ukraine and Kazakhstan is causing some concern, although it's too early to quantify any losses that may have occurred.
There are doubts over the health of US winter wheat too, after the USDA last night cut their national crop ratings by 3 percentage points in the good/excellent category to 60%. Top producing state Kansas saw the percentage of its crop rated in the top two categories slump by eight points to 52%. Ideally the crop there would like one more decent rain to see it through to harvest in a couple of weeks time.
Spring wheat planting in the US is progressing at a record pace, with 94% of the crop now in the ground.
Tunisia is forecast to have its largest grain harvest in decades this year, according to its Agriculture Minister. Harvesting there begins next month.
14/05/12 -- EU grains finished mostly lower, although May 12 London wheat closed up GBP1.00/tonne to GBP173.50/tonne. Nov 12 fell GBP0.50/onne to GBP147.70/tonne. Aug 12 Paris wheat was unchanged at EUR197.50/tonne and new crop Nov 12 fell EUR0.75/tonne to EUR195.50/tonne.
Strategie Grains now say that 11% of German winter wheat and 13% of winter barley were lost to winterkill, an upward revision from the respective 6% and 9% estimated previously.
The German spring wheat, spring barley and corn planted area estimates are all revised higher on the back of these losses.
They estimate the German soft wheat crop at just under 22 MMT compared with 22.7 MMT last year. Barley output is seen 9% higher this year at 9.6 MMT, with corn production marginally higher at 5.3 MMT. Their wheat estimate is 0.5 MMT below the USDA's figure released Thursday, whilst their barley forecast is 0.5 MMT higher than the USDA.
They also say that the weather in France during April "was again rather unusual. The volume of national rainfall was almost 165 % of the average for this month. There were rainstorms and especially heavy rain in western France (double the seasonal average). The water balance since the start of March is now +30% in most regions but it remains in deficit compared to average for the period from September through May."
We maintain our estimate for total wheat area published April 17 of 4.8 Mha (4.99 Mha in 2011/12). Projected wheat yield is revised up at 7.13 MT/ha (7,09 MT7/ha previously and 6.81 MT/ha in 2011/12) due to the increases in Normandy, Picardie and Nord-Pas-de-Calais. We now expect soft wheat production at 34.22 MT (34.06 MT previously and 33.99 MT in 2011/12), they add.
11/05/12 -- EU grains finished mixed with May 12 London wheat finishing down GBP1.25/tonne to GBP172.50/tonne, and new crop Nov 12 falling GBP0.30/tonne to close at GBP148.20/tonne. Aug 12 Paris wheat ended EUR3.75/tonne lower at EUR197.50/tonne, whilst Nov 12 was EUR0.75/tonne firmer at EUR196.25/tonne.
On the week as a whole May 12 London wheat gained GBP0.25/tonne and Nov 12 lost GBP1.30/tonne to close the week at its lowest since February. Nov Paris wheat was EUR0.50/tonne higher on the week.
EU wheat still looks expensive relative to its US counterpart. Benchmark new crop month Jul 12 Chicago wheat closed below USD6/bushel for the first time in the contracts life today, and trading in that began in August 2009.
EU wheat exports will slump to their lowest levels in five years in 2012/13 the USDA said yesterday. At 14.5 MMT they will be down 12% down on this season and 37% lower than last year, they forecast.
The weak euro is helping to support Paris wheat a little, with sterling briefly breaking through the 1.25 level for the first time since Nov 2008 today. Even so EU exports aren't exactly flying out of the door. Brussels issued 176 TMT of soft wheat export licences this week, bringing the marketing year to date total to 11.65 MMT, 32% down on year ago levels.
April rains have replenished soil moisture deficits in the UK, France and western Germany. FranceAgriMer rate 65% of the French wheat crop in good/excellent condition. The French body also raised their estimates for wheat and corn 2011/12 carryover yesterday due to lower exports than anticipated.
Commodities in general were under pressure today following the announcement that America's largest bank, JPMorgan Chase, has suffered losses of "at least" USD2 billion due to a risky hedging strategy. That may lead to calls for tighter regulation on speculative activity in the grains market.
10/05/12 -- EU grains finished mixed but mostly lower with May 12 London wheat ending up GBP0.25/tonne to GBP173.75/tonne, new crop Nov 12 was down GBP0.40/tonne to GBP148.50/tone. Expiring May 12 Paris wheat crashed EUR12.75/tonne to EUR215.75/tonne, whilst new crop Nov 12 was down EUR1.75/tonne to EUR195.50/tonne.
The last remaining old crop Paris contract staged another dramatically thin performance, reversing all of yesterday's equally off the wall EUR11.50/tonne gains and then some.
Today was all about the USDA who gave us their first 2012/13 world crop production estimates, along with both old crop and new crop ending stocks projections both in the US and around the world.
Essentially the reports were bullish soybeans (and thus rapeseed), bearish corn and somewhere in the middle for wheat.
For soybeans they cut 2011/12 US ending stocks by more than expected to 5.7 MMT and projected 2012/13 carryout even tighter at 3.9 MMT. US ending stocks have only been lower than this four times in the last forty years, and when the latter number is taken on a stocks to usage basis this is the tightest availability since the mid-1960's. Meanwhile insatiable China's 2011/12 soybean imports are seen rising 3.7 MMT to 56 MMT, and by a further 4 MMT to 61 MMT in 2012/13.
The USDA pegged the EU-27 rapeseed crop down almost 6% to 18 MMT this year. World and EU-27 rapeseed ending stocks are forecast at nine year lows in 2012/13. World stocks will slump 32% to 2.86 MMT – less than half of where they were two years ago. Europe’s stocks meanwhile will more than halve from where they are expected to be at the end of this season to just 675,000 MT.
They estimated that the UK will produce a marginally lower 2.7 MMT rapeseed crop this year, with French production also seen down a tad to 5.25 MMT. German output will recover 15% from last season's drought damaged crop to 4.45 MMT.
The world corn numbers were undeniably bearish, with US 2011/12 ending stocks increased to 21.6 MMT and those for 2012/13 seen more than doubling to 47.8 MMT. US production this year was pegged at a record in excess of 375 MMT, with world output also pegged at a record of almost 946 MMT - well above the ICG's current estimate 900 MMT.
For wheat they gave us a world crop of 677.6 MMT, which was very much in the ballpark of other estimates from the IGC (676 MMT) and the FAO (675 MMT). World ending stocks are seen declining by 9 MMT to 188 MMT in the coming season.
The EU-27 wheat crop will come in at 132 MMT this year, they said. That's a 4% drop on last year. In amongst that there was little change on last year for the three main protagonists, with a UK crop of 15.6 MMT, a French crop of 36.5 MMT and a German crop of 22.5 MMT.
Separately FranceAgriMer raised their estimates for wheat and corn 2011/12 ending stocks there due to domestic prices being too high to meet earlier export forecasts.
09/05/12 -- EU grains finished mostly lower with May 12 London wheat closing down GBP1.00/tonne at GBP173.50/tonne, and Nov 12 falling GBP1.05/tonne to GBP148.90/tonne. May 12 Paris wheat bucked the trend and jumped EUR11.50/tonne to EUR228.50/tonne and new crop Nov 12 fell EUR0.75/tonne to EUR197.25/tonne.
May 12 Paris wheat goes off the board tomorrow, and clearly got very technical at the eleventh hour, so we shouldn't read too much into that. Old crop milling wheat delivered Rouen is trading around EUR205-207.00/tonne - the equivalent of around GBP165-166.00/tonne. New crop wheat to the same destination for July delivery is around EUR197.00/tonne - or just over GBP158.00/tonne.
The pound rose to fresh 3 1/2 year highs against the euro today as Greece is starting to look increasingly likely to baulk at any more austerity and select the default option. Meanwhile Spain says that it is to part nationalise it's fourth largest bank BFA-Bankia after the markets close tonight.
The repercussions over a possible Greek default are seeing spec money exit the grains market, especially ahead of the USDA's reports tomorrow which will include their first ever forecasts for 2012/12 crop production.
EU-27 crop conditions meanwhile have improved significantly in the past 4-5 weeks, with abundant rainfall across the UK, France and Spain. The western half of Germany has also received beneficial moisture, although further east and into Poland things are looking less rosy.
In the midst of their 2012 wheat harvest India’s food ministry report that the country’s food grain stocks as of May 1 are 71.1 MMT, more than three times the required buffer amount, with stocks likely to rise to 80 MMT as the harvest wraps up. They have today signed a trade agreement with Iran which will probably act as a precursor for them to export as much as 4 MMT of wheat to the Arab nation weighed down by sanctions from the West.
The US winter wheat harvest has already begun in periphery southern states and will soon be underway in the nation's largest producing state of Kansas, some 3-4 weeks earlier than normal. Bumper output is expected with crop conditions far better than they were a year ago.
08/05/12 -- EU grains finished higher with May 12 London wheat finishing up GBP2.50/tonne to GBP174.50/tonne, and new crop Nov 12 rising a more modest GBP0.45/tonne to close at GBP149.95/tonne. May 12 Paris wheat ended EUR0.25/tonne higher at EUR217.00/tonne, whilst Nov 12 was EUR3.25/tonne firmer at EUR198.00/tonne.
There seems to be little rhyme or reason to the markets at the moment, they are up for a day or two and then down for a day or two - it's been more than a month since May 12 London wheat closed outside the GBP170's.
These remaining old crop months are pretty illiquid though, new crop Nov 12 London wheat however does seem to be in a trend, and it's downwards, having closed at GBP163.50/tonne in late March. Nov 12 Paris wheat peaked at EUR208.25/tonne at the same time.
Fresh news is thin on the ground. Jordan bought 50,000 MT of optional origin wheat in a tender overnight. Tunisia bought 75,000 MT of wheat from an unspecified origin.
America's harvest is growing ever closer though and all the signs point to good, possibly even record, yields in some states. Spring wheat is also going into the ground in a very timely manner.
Meanwhile US corn planting is at its third fastest pace ever, maturity is massively above normal, 32% now as opposed to just 6% last year. This means that the crop is less likely to be at the crucial pollination stage at the height of the summer heat. It should also be less vulnerable to an early frost too.
The USDA will report on US and world production prospects for 2012 for the first time on Thursday. We've got used to being thrown a surprise or two in recent reports, few would bet against them doing the same again this time round.
07/05/12 -- EU grains finished mostly lower although London wheat was closed for a belated May Day holiday. May 12 Paris wheat ended down EUR3.25/tonne at EUR216.75/tonne, new crop Nov 12 was down EUR1.00/tonne to EUR194.75/tonne.
For new crop Nov 12 Paris wheat this was the lowest close in two months as the coming season's harvest hopes rise on improving prospects in Western Europe and the US.
Much of the SE of England, and most of France and Spain have had between two and six times their normal rainfall totals in the past 14 days, according to Martell Crop Projections.
US production hopes have also improved significantly since winter wheat went into dormancy, with abundant rains in recent months boosting hopes that the top producing state of Kansas will have a record yield this year.
Weekend election results in France and Greece knocked the euro to its lowest levels against the pound since November 2008. New French PM Francois Hollande is likely to less willing to climb into bed with German Chancellor Angela Merkel than the ousted Nicolas Sarkozy.
That potentially threatens the uneasy accord that has been struck within the fiscally mired Eurozone of late. Meanwhile Greece faces political and financial turmoil after the pro-austerity parties took a thrashing at the polls.
The market is already suggesting that a new coalition Greek government is unlikely to have enough support from the pro-austerity sector to push through the necessary spending cuts needed to qualify for the next tranche of EU bailout funding.
With each week that passes the new 2012/13 marketing year gets closer. The USDA will issue their first production estimates for the coming season on Thursday this week. US analytical firm Informa Economics on Friday forecast word corn production in 2012/13 at a record 932 MMT, which is 67 MMT (or 7.6%) up on last year. That's well above the IGC's April estimate of 900 MMT.
04/05/12 -- EU grains finished mostly lower with May 12 London wheat closing down GBP5.00/tonne at GBP172.00/tonne, and Nov 12 falling GBP1.85/tonne to GBP149.50/tonne. May 12 Paris market rose EUR2.50/tonne to EUR220.00/tonne and new crop Nov 12 fell EUR3.00/tonne to EUR195.75/tonne.
May 12 London wheat was down GBP6.50/tonne on the week, with new crop Nov 12 falling GBP6.10/tonne. Conversely May 12 Paris wheat rose EUR6.30/tonne compared with last Friday, whilst Nov 12 fell EUR7.00/tonne.
For May 12 London wheat this was the lowest close in more than three weeks, for new crop Nov 12 it was the lowest close since late February.
Paris rapeseed futures also fell hard, closing with losses of around EUR7-10/tonne on ideas that April rains and cooler temperatures have boosted Western Europe's chances of salvaging a decent crop this year and forecasts for similar conditions to move into Eastern Europe this weekend.
US wheat prospects are looking good with a sharp rebound in production in the top producing states of Kansas and Oklahoma on the cards. Crops are well forward too, with one report coming through today of harvesting having already started in Oklahoma 3-4 weeks ahead of schedule.
Both states are expected to have their biggest wheat crops since 2003.
US analytical firm Informa Economics today estimated the 2012 US winter wheat crop at 45 MMT, an increase of more than 10% on last year. In addition they pegged spring wheat plantings at 13.5 million acres, 1.5 million above the USDA's latest estimate.
Corn plantings in the US are also seen rising this year, to 96.1 million acres according to Informa which is 0.2 million more than the USDA most recently said.
Outside markets were also a bearish influence, with Brent crude falling through key support levels and US oil shedding more than 4% on the day to trade below USD100/barrel for the first time since February. The euro slumped to its lowest levels against the pound since June 2010 ahead of nervousness ahead of weekend elections in France and Greece.
03/05/12 -- EU grains finished mostly lower. Technical May 12 London wheat finished up GBP2.75/tonne at GBP177.00/tonne, making it now a curious GBP5.50/tonne premium to July. The more liquid new crop Nov 12 fell GBP2.40/tonne to close at GBP151.35/tonne. May 12 Paris wheat ended EUR0.25/tonne lower at EUR217.50/tonne, whilst Nov 12 was EUR3.00/tonne weaker at EUR198.75/tonne.
Frankly, London wheat is becoming more and more of a joke, having less correlation to the physical market than ever. It remains to be seen how much longer this charade can carry on for with a new Black Sea wheat future set to begin trading next month.
FranceAgriMer say that the soft wheat crop there is now rated 65% good/excellent, up two percentage points on a week following plentiful April rains.
Brussels issued 164TMT of soft wheat export licences this week, down by more than a quarter on last week.
With only 8 weeks to go to the end of the marketing year, EU-27 soft wheat exports are down by almost a third on year ago levels, a situation unlikely to improve given current unadvantageous pricing structures.
The Ukraine Ag Ministry said that Ukraine exported 17.8 MMT of grains from July 1st through to May 3rd, an 80% increase on a year ago. They also added that they will export 2.0-2.2 MMT/month in May-Jun, bringing the entire 2011/12 marketing year exports to around 22 MMT.
The UN's Food and Agriculture Organisation say that world wheat production in the coming season will come in at 675 MMT, 3.6% down on last year but broadly in line with other estimates from the likes of the IGC who said 676 MMT late last month.
02/05/12 -- EU grains finished mixed with May 12 London wheat down GBP2.25/tonne to GBP174.25/tonne and Nov 12 down GBP1.40/tonne to GBP153.75/tonne. May 12 Paris wheat was EUR1.25/tonne higher at EUR217.75/tonne, new crop Nov 12 was down EUR2.00/tonne to EUR201.75/tonne.
Rapeseed was showing solid gains for most of the day amidst ideas that the EU-27 crop would struggle to be much higher than 18 MMT this year, further supported by Chicago soybeans surging to fresh highs in afternoon trade.
A late capitulation, as soybeans got dragged lower by sinking corn and wheat values across the pond, however saw rapeseed futures close well off session highs. Nov 12 Paris rapeseed closed EUR1.00/tonne higher at EUR475.75/tonne having been as high as EUR481.00/tonne at one stage.
April's abundant rainfall means that wheat potential in the UK, France and Germany has improved dramatically.
Things would appear to have improved significantly in Ukraine too, where agronomist Mike Lee reports "perfect growing conditions" and is upbeat about new crop production prospects.
In America, a Kansas crop tour found winter wheat crops there to be in great shape with yields on day one coming in at 53.6 bushels an acre, much better than the 40.7 bushels an acre average over the last three years and more than 50% up on the state's poor average of just 35 bushels and acre last year.
A Bloomberg survey pegs the final Kansas wheat yield at 45.8 bushels an acre this year, the best since 2003.
The crop there is also said to be around four weeks ahead of normal maturity, meaning that an early harvest is on the cards leaving less time for Mother Nature to throw it a curveball.
The euro was under pressure again on news that Euro-zone unemployment hit 10.9% in March - the highest since the euro was formed in 1999.
01/05/12 -- EU grains finished lower with May 12 London wheat closing down GBP2.25/tonne at GBP176.50/tonne, and Nov 12 falling GBP0.85/tonne to GBP155.15/tonne. The Paris market was closed for the May Day holiday.
With Paris and much of the continent, including the Black Sea, out of action there was little going on today.
The USDA last night said that US farmers planted a quarter of the anticipated 2012 corn acreage in just a week as of Sunday night. Planting is already past the halfway point at 53% done versus only 27% normally. Emergence is 15% compared to 6% normally.
There's a long way to the finishing post yet, but the crop has clearly been given the best possible start.
In addition spring wheat plantings are more than double their normal rate at 74% complete and emergence is 30% versus only 8% for the five year average.
Winter wheat crop conditions improved slightly from last week to 64% good/excellent (compared to just 34% a year ago). Maturity of the crop is also well advanced at 54% headed compared to 24% on average.
The USDA attaché in Romania said that widespread damage to the winter rapeseed crop there will see an increase in corn acres this spring, a situation that is likely to be replicated in many parts of Eastern Europe. Romania's wheat and barley output are also both seen around 10% lower this year.
In Western Europe the drought may finally be broken but April rains have arrived late enough to see Spain's corn plantings fall by more than 15% this spring, according to the Ag Ministry there. Durum wheat production in the south of the country is likely to take a significant hit, although rain in the north over the past month should alleviate some damage to the wheat and barley crops there.
For the UK and France the old adage "rain makes grain" will be tested this year, with some crop reports already saying that there's been no crop damage "yet". The Met Office say that the UK's April rainfall total was the wettest on records which date back to 1910, surpassing even the previous record of 120.3mm set in 2000.
Out of interest rain did indeed make grain in 2000 as we ended up with our second highest wheat crop ever. The record high production year of 2008 was also dogged by persistent rains that led to some fields not getting harvested until October.