Nogger's Blog

14/11/13 -- EU grains closed mostly higher, supported by the very strong early pace of European wheat exports this season, and ideas that this trend is set to continue. Strategie Grains raised their forecast for EU-28 soft wheat exports in 2013/14 to 23.7 MMT, that's up 1.6 MMT from their previous estimate and 5 MMT more than in 2012/13. They also cut their forecast for the EU-28 corn crop this year by 100 TMT to 64.8 MMT, although that's still 7.2 MMT more than a year ago.

The session ended with Nov 13 London wheat down GBP0.30/tonne to GBP164.10/tonne, Jan 14 Paris wheat EUR2.00/tonne firmer at EUR205.25/tonne, Jan 14 Paris corn EUR1.00/tonne steadier at EUR174.00/tonne and Feb 14 Paris rapeseed up EUR1.75/tonne at EUR381.75/tonne.

With traders already having one eye cast on prospects for 2014, Strategie Grains forecast the EU-28 soft wheat planted area rising 4% from 23.2 million hectares to almost 24 million, with production seen rising 5 MMT to 140 MMT - the highest since 2008 and the second highest ever. That implies an EU-28 all wheat crop of around 148 MMT next year, which is 2 MMT more than US analysts Lanworth estimated yesterday and 4.7 MMT more than the USDA have the EU's 2013 crop pencilled in at.

The HGCA said that the UK would plant 22% more wheat for the 2014 harvest, at a shade under 2 million hectares. Interestingly they also forecast the winter barley area rising sharply, up 55% to 484k ha, noting that "a renaissance of winter feed barley...could well present a challenge for the market." As you might expect the spring barley area is seen falling significantly from this season's exceptional acreage, down 40% to 534k ha.

The UK OSR area (both winter and spring) is expected to rise 3% to 740k ha - the second largest on record. The area given over to oats is seen falling 26% to 130k ha, whilst the area left fallow will decline 36% to 164k ha, they estimated.

The bottom line is that the UK should have good volumes of wheat and barley to export again next year, given anything like a half decent growing season. The size of the European and FSU corn crop may help fashion the direction of prices going forward.

Certainly it is expected that both Ukraine and Russia will increase corn plantings significantly in 2014, given the problems that they'd had with winter grain sowings. The Ukraine Ministry say that the winter planting campaign there is now over at 7.726 million hectares, down 4.6% on last year and 5.8% down on the originally hoped for 8.2 million. With a small decrease in sunflower acreage in 2014, the Ministry expect corn plantings to rise by around 500k ha in 2014. They are currently 81% through harvesting this year's record crop (producing 24 MMT to date), meaning that a second successive all-time high corn output in 2014 is a distinct possibility.

In Russia the 2013 corn harvest is almost two thirds done, producing 8.4 MMT to date. They are also on track for a record corn crop this year on a higher planted area, and the more widespread use of higher yielding hybrid varieties. Winter grain plantings in Russia are at 14.4 million hectares, around 2 million below the original target. The Russian Ministry say that spring grain plantings should increase by at least that 2 million ha, and possibly by as much as 3 million ha. Most of that will be corn, giving them the potential to bring in their fourth record corn crop in a row in 2014.

Ukraine are going full steam ahead on the export front now that the corn harvest is well advanced. The USDA's FAS in Ukraine forecast wheat exports rising 45% to 10 MMT in 2013/14, with corn exports up almost 31% to 17 MMT and barley shipments increasing 19% to 2.5 MMT. They are aiming to ship the maximum volume of grains that their current infrastructure constraints allow this month - around 3.5 MMT.

Libya are tendering for 50 TMT of wheat for Dec/Feb shipment. Tunisia cancelled their tender for 92 TMT of wheat for Dec/Jan delivery without giving a reason. Egypt tendered for wheat for Dec 1-15 shipment, with the results expected later this evening.

The market is wondering whether today is the day that they buy French wheat. It would be their first such purchase since before last Christmas - they've only bought Russian, Romanian or Ukraine wheat so far in 2013/14, although supplies of all three have tightened up recently.