EU Grains Slip On Lead From Chicago

18/12/13 -- EU grains closed mostly lower, following Chicago wheat slumping to its lowest levels in 18 months. The session ended with Jan 14 London wheat down GBP0.55/tonne at GBP163.45/tonne, Jan 14 Paris wheat was EUR0.50/tonne easier at EUR207.50/tonne, Jan 14 Paris corn was down EUR0.50/tonne at EUR173.00/tonne and Feb 14 Paris rapeseed slumped EUR2.50/tonne to EUR361.25/tonne.

As we head towards the year end we find that London wheat prices have fallen around 20% versus where we were on 31 Dec 2012. Paris wheat has dropped by a slightly more modest 17% during this time, compared to a decline of 21% in rapeseed values and a steep 38% fall in the price of corn.

Whether things will improve, or simply continue to get worse, in 2014 remains to be seen. The question seems to be is the glass half full, or half empty. Historically these levels are still pretty good, except maybe only not so when looked at in the rear view mirror. If wheat prices were really that bad, then surely farmers would be planting less?

Toepfer said that Germany's winter wheat plantings are up 3% on last year at 3.22 million hectares, whilst barley plantings are unchanged and the OSR area is down almost 5% at 1.39 million ha. They said that Germany’s winter grain crops are generally in good condition.

India's wheat plantings for the 2014 harvest were at 25.4 million hectares as of Dec 13, versus 22.8 million a year previously.

European and US wheat plantings meanwhile are seen higher for 2014, and crop conditions are generally good and significantly better than a year ago.

Canada has just brought in a record wheat harvest, and Australia's crop is generally higher than was expected.

Dr Cordonnier reported that wheat output in Brazil's Rio Grande do Sul is up 56% this year, making it the leading producing state in the country. Conab put national production at 5.3 MMT, an increase of 22%.

Ukraine said that it had exported 16.4 MMT of grains so far this marketing year (to Dec 13), an increase of 24% on a year ago. Wheat exports are up 14%, those of barley up 12% and corn shipments are 42% higher.

Rusagrotrans said that Russia would exported 15.9 MMT of grains in the first half of 2013/14 (Jul/Dec), including 12.2 MMT of wheat. Decembers exports would fall to 2.0 MMT from 2.55 MMT last month, they said. They peg the 2013/14 grain harvest at 90.8-91.2 MMT in clean weight (70.7 MMT in 2012), with full season exports at 21.6 MMT versus 15.55 MMT a year ago.

The market was a bit surprised that Russia won a share of yesterday's Egyptian tender, having become convinced that they were out of the quality wheat market until 2014. Romania also keeps squeezing out the odd cargo if the price is right, also confounding belief that they are just about sold out.