August 3, 2012


France's wheat prices down as EU, Russia crop fears ease


Wheat, which rose to US$8.97 a bushel in early deals in Chicago, showed losses of 3% at one point as fears eased for Russian exports of the grain, and over the damage, to yields at least, of the French crop from persistent rains.


In Europe, Paris wheat for November closed 1.8% lower, with London wheat ending down 1.5%. The performance was in part influenced by corn, which also showed losses of 2%, before late buying attributed to decreased hopes for rain in the Midwest, firm US ethanol production data and beginning-of-the-month buying.


But the wheat price decline also followed comments from a government source that Russia's wheat crop could hit 50 million tonnes, enough for an exportable surplus of 11 million-15 million tonnes.


The production figure would represent an upgrade from the current forecast of 46 million-49 million tonnes, the source told Reuters, and come in well above market estimates of 45 million tonnes, or lower.


Russia's Prime Minister, Dmitry Medvedev, on Tuesday (July 31) said that Russia would maintain an unspecified exportable surplus, saying that market manipulation was behind a rise in domestic grain prices. Furthermore, Canada's winter wheat harvest, albeit a small amount of the national crop, was reported as beating expectations.


"Some producers in Canada's winter wheat harvest areas have started earlier with yield in the 80-100 bushels-per-acre range versus typical yields of 65-70 bushels per acre," broker US Commodities said.


Fears eased for Europe's crop too, with FCStone noting that "in Germany better-than-expected yields are expected now they are fully into harvesting, while it is also possible that French yields could rise".


At southern France, which is less affected by rains than the north, "mean protein levels are being recorded above 11.2%".


The comments followed an upgrade by France's farm ministry of its estimate for the domestic soft wheat crop, the EU's biggest, by 1.6 million tonnes to 36.7 million tonnes, putting it well ahead of last year's 34 million-tonne result.


"Since April, wet weather conditions have been favourable for grain yields, in contrast to the very-dry spring of 2011," the ministry said.


"However, questions remain about the quality of the harvest due to persistent rains."


The upgrade reflected an estimate of a yield of 7.5 million tonnes per hectare and, factoring in a durum crop pegged at 2.4 million tonnes, would bring the total French wheat crop to 39.1 million tonnes.


The USDA, whose data set world benchmarks, estimates France's all-wheat crop at 38.0 million tonnes, as does the International Grains Council. The ministry also raised its estimate for the French barley harvest to 11.3 million tonnes, from a previous estimate of 11.0 million tonnes, including a historically high 4.4 million-tonne spring barley crop, up 80% on the 2011 result.


"The spring barley harvest is put at a level unseen for over 20 years, thanks to a rise in area combined with higher yields", pegged a little over five tonnes per hectare.


France's rapeseed crop, which overtook Germany's to become the EU's biggest last year, was pegged at 5.3 million tonnes, an upgrade of 200,000 tonnes, but still slightly behind the 2011 harvest "due to lower yields and despite increased area".


Separately, Cetiom, the French oilseeds institute, pegged the French rapeseed crop at 5.3 million-5.6 million tonnes, citing results from the early harvest.


"We're pretty surprised by the yields," which at 3.3-3.5 tonnes per hectare were above the five-year average, Fabien Lagarde, the Cetiom technical director, said.


On Tuesday (July 31), Oil World upgraded by 800,000 tonnes its forecast for the EU rapeseed harvest.

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