EU Grains Recover To End Mostly Higher, Exports Impress

20/08/15 -- EU grains traded mixed for most of the day, but recovered to finish generally higher in afternoon trade. Front month Sep 15 Paris wheat was under pressure, down EUR3.25/tonne yesterday (as opposed to the benchmark Dec 15 contract which was only down EUR1.50/tonne), it shed as much as another EUR4.50/tonne today marking a 4.6% loss in two days. The gap between it and Dec 15 is now almost EUR10/tonne.

That can probably be attributed to harvest pressure following record production this year, combined with the fact that both the delivery points in Rouen against the contract aren't actually open for the intake of wheat as they are already full. Bloomberg reported today that the Nord Cereales facility in Dunkirk is also full.

That highlights the short-comings of the Paris wheat contract once again.

Agritel report 11% protein milling wheat delivered to Rouen is only making around EUR160/tonne. That's only 3 euros more than feed barley, and the equivalent of around the same price as Nov 15 London feed wheat.

At the close, Nov 15 London wheat was GBP1.30/tonne firmer at GBP115.75/tonne. Sep 15 Paris wheat was EUR1.50/tonne lower at EUR169.50/tonne, although Dec 15 ended EUR0.75/tonne higher at EUR178.75/tonne. Nov 15 Paris corn closed up EUR0.75/tonne to EUR174.25/tonne and Nov 15 rapeseed was up EUR1.50/tonne at EUR364.25/tonne.

The Russian rouble has hit new lows against both the US dollar and euro this morning, which will further increase the tax that their exporters have to pay to ship out wheat. It also won't encourage local producers to sell their grain to the government's newly re-opened intervention fund either.

Whilst Russia's grain exports struggle, Ukraine's do not. Their Ag Ministry estimate total grain exports this season at over 36 MMT, which would beat the 2014/15 record of 34.8 MMT. They see production at 60 MMT, carry-in from last season at around 10 MMT and domestic usage at 24-25 MMT.

The early grain harvest is over, but the corn crop is still out in the field and some reports suggest that it's struggling and won't make anything like the USDA's projected 27 MMT this year.

MDA CropCast cut their forecast for the Ukraine corn crop to 23 MMT today, down 19% on a year ago. "Dryness continues to rebuild across Ukraine, especially central and western areas, as well as North Caucasus, Belarus and southern Central Region," they said. There's some talk that this could also have an adverse affect on sowings for the 2016 harvest - particularly of early-planted winter rapeseed.

"Ukraine rapeseed production could fall for the fourth consecutive year in 2016 due to problems with planting. Throughout July and August, soil moisture levels have been insufficient for sowing rapeseed as a result of prolonged periods of dry weather. Consequently, this has delayed drilling and could mean that the short optimal planting window (August 10-25) may be missed," the HGCA said this week.

MDA CropCast also trimmed their outlook on Europe's corn crop a little and now see that at only 56.3 MMT, a 17% fall compared with last year.

Late in the day it was confirmed that Brussels issued 563 TMT worth of soft wheat export licences this past week (up from 349 TMT last week), taking the cumulative season-to-date total to 2.87 MMT, up 13% on this time a year ago.

Barley export licences this week were 273 TMT, up from 161 TMT a week ago. These now total a very impressive 2.23 MMT for the campaign so far, an increase of 84% on this time last year.