EU Wheat Continues To Slide

23/07/13 -- EU grains ended lower, extending the recent slide, on harvest pressure. London wheat began the day higher, trying to consolidate a little, but with the pound rising to a 4-week high against the dollar, weaker US markets and new crop Dec CBOT corn slumping to its lowest levels since Nov 2010, holding onto those gains was never going to those early be easy. And so it proved.

Benchmark Nov 13 London wheat closed GBP1.65/tonne weaker at GBP164.50/tonne, with Jan 14 down GBP1.50/tonne to GBP165.75/tonne and Nov 13 Paris wheat settling EUR2.25/tonne easier at EUR190.25/tonne.

The Spanish Ag Ministry forecast soft wheat production there up 29% this year to 6.01 MMT, with all wheat output rising 35% to 6.89 MMT. The barley crop, of which Spain is the highest spring producer in the EU, is forecast even higher at 41% up on 2012 at 8.41 MMT. Corn production is also seen rising 7% to 4.53 MMT.

Tunisia's cereal crop is not seeing doing so well, down from a previous Ministry forecast of 1.36 MMT to only 1.2 MMT, a substantial drop on output of 2.2 MMT last year.

It's output in the Black Sea, particularly Ukraine, that is weighing on market sentiment though. Their grain harvest currently stands at 23.47 MMT, with average yields up 25% on last year at 2.86 MT/ha.

That includes a winter wheat harvest of 17.16 MMT so far, off 81% of the planned area, which suggests final output of around 21 MMT. That would be up 33% up on last year and above the USDA's current forecast of 19.5 MMT.

The Ukraine barley harvest currently stands at 5.55 MMT, roughly split 50:50 between winter and spring sown crops. The winter barley harvest is almost over at 98% done, with the spring harvest 66% complete. The 2013 OSR harvest is 90% done at 1.92 MMT, suggesting final output in excess of 2 MMT, a 50% increase on last year.

Agritel forecast 2013/14 Ukraine wheat exports at 9 MMT versus 8 MMT from the USDA and 7.2 MMT in 2012/13, barley exports are seen at 2 MMT.

Russia's grain harvest is currently seen at 30.7 MMT, with average yields up 22% at 2.98 MT/ha. That includes 25.4 MMT of wheat (yields up 24%) and 2.6 MMT of barley (yields up a more modest 6%).

Russia's grain exports for Jul 1-17 stood at just under 1 MMT, an increase of 10% versus last year. Of that wheat accounted for 772 TMT. IKAR yesterday increased their forecast for Jul 13 wheat exports from 1 MMT to 1.2 MMT.

The Kazakhstan Ministry forecast a 2013 grain crop of 15 MMT, up 17% versus last year.

French market prices see OSR offered at EUR371/tonne (circa GBP320/tonne) on an FOB basis Moselle for August shipment. New crop milling wheat is offered at EUR190/tonne (circa GBP164/tonne) deld store. New crop barley is EUR176/tonne (circa GBP152/tonne) deld store.