EU Grains Mixed, OSR Area Seen Down For 2014 Harvest

12/11/13 -- EU grains closed mixed with Nov 13 London wheat ending down GBP1.00/tonne at GBP164.200/tonne, Jan 14 Paris wheat finishing EUR0.50/tonne lower at EUR204.00/tonne, Jan 14 Paris corn EUR0.75/tonne weaker at EUR175.75/tonne, whilst Feb 14 Paris rapeseed rose EUR0.75/tonne to close at EUR380.50/tonne.

Now that we have the much-awaited USDA's November WASDE report at our disposal the market appears to be thinking two things. One is that the corn news maybe isn't as bearish as was feared, the other is that US wheat is over-priced relative to the latter.

Northern hemisphere farmers are fully focused on plantings for the 2014 harvest, and already there are a few clues as to where we may be as far as supply and demand goes twelve months from now.

Strategie Grains say that the EU-28 oilseed area will drop 2% to 11.9 million hectares for next year's harvest, including an OSR area of 6.6 million ha (down 1%) and a reduction in sunflower plantings to 4.4 million ha (down 3%). They haven't yet given us a wheat area for next year, but they are alluding to an increase.

There seems to be a general dissatisfaction with OSR as a crop in terms of price, yield and the difficulty of growing it across Europe in the past couple of seasons. The German OSR area is forecast 4% lower at 1.4 million hectares by their Oilseed Processors Association. APK Inform say that Bulgaria's OSR area could halve.

Barley prices are also low, so what is a grower to do? Brown & Co reported at last week's well-attended Fengrain conference in Peterborough that the average cost of growing wheat for the 2013 harvest in the UK was between GBP110-130/tonne, depending on the final yield. It will surprise few if production here shows a very sharp rebound next year, particularly given the fact that winter sown crops currently look hugely better than they did a year ago. Some are already suggesting that we could be looking at a record UK output in 2014.

The Russian grain harvest is 93.5% complete at 92.6 MMT, versus only 73.3 MMT a year ago. Wheat accounts for 53.7 MMT of that, off 97.4% of plan, versus 39.7 MMT in 2012.

Unusually mild weather means that Russian winter grains plantings have advanced to 87.7% of the original target at 14.4 million hectares, although that still lags the 15.68 million ha that had been planted this time a year ago.

In Ukraine, winter grains have now been sown on 7.714 million hectares, 94% of original intentions. That includes 6.292 million ha of wheat and 1.173 million ha of barley. Emergence is at 90% of the sown area, and 85% of the crops are said to be in good/excellent condition by the local Ag Ministry. The Ukraine Weather Centre say that winter crops are in as good, if not better, condition than a year ago.

The Ukraine harvest is now said to be in excess of 57 MMT, beating the 2011 record of 56 MMT, and 94% complete. The Ministry say that they aim to have a grain harvest of 72 MMT by 2020. That may sound like pie in the sky, but it would be comfortably achievable if they could get anything like Western yields.

In other news, Bangladesh are tendering for 50 TMT of optional origin wheat for Dec/Jan shipment. Tunisia seek 92,000 tons durum wheat optional origin for Dec/Jan shipment and South Africa bought 32,259 MT of Ukraine wheat last week.

The French Farm Ministry estimate their 2013 soft wheat crop at 36.7 MMT versus a previous estimate of 36.825 MMT, but still up 3.4% from a year ago.