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Weekly grain and oilseeds market view from Europe

US demand rationing needed… poor quality wheat in Germany, Poland and the Baltic countries… but rains a help for French corn… in the latest in a weekly series, EU experts give their views on grain and oilseed markets.


Global Grain

Weather problems keep quality wheat market dynamic

The global market remains dynamic, as there are still enough weather-related problems in North America, Australia and Europe to keep the quality wheat market, if not the feed wheat market, underpinned.

However, as funds have recently switched to holding long positions in Chicago, the less threatening short-term forecast has left the market open to bouts of profit-taking, dropping Chicago wheat prices $1 a bushel off the early July peak.

Declining spring crop ratings has the trade waiting to see what adjustments the US Department of Agriculture will report in next week's Wasde world crop supply and demand report, which will provide market direction in the short-term.

Traders are expecting a significant cut in the US corn yield, and a sequential fall in ending stocks, though levels will remain adequate. A small reduction in US soy yield and production is also likely.

Long-term weather forecasts are still expected to bring warmer weather into the Midwest, which could still affect corn and soy yields, although the trade continues to trade short-term weather.

The US wheat balance sheet would point to the fact that some demand rationing is needed, especially in the higher quality classes, as the current export pace of 15% ahead year-on-year, against the projected 8% decline, is not sustainable.

The Wasde report will provide the market with the numbers. What the trade makes of them, and their level of credibility, is anyone's guess.

David Woodland, Gleadell


European Grain

France gets export boost from EU rains

The heavy rain in the north of the EU is likely to lead to poor quality wheat in Germany, Poland and the Baltic countries.

This is likely to boost export demand for France's wheat to both third countries and the Baltic countries.

Russia is showing very good results. Of the 22m tonnes of wheat harvested, yields are up by 3.6% on last year, itself a record year in terms of production.

Quality is a problem this year, however, with a smaller proportion of high-protein wheat.

The unhelpful harvest weather in the UK is starting to cause some concern to UK farmers and the trade.

In terms of quality, the specific weight of French spring barley is good, so to for the winter crop. The harvest in the Black Sea is making progress. To date, 4.6m tonnes of barley has been harvested in Ukraine and 2.4m tonnes in Russia. Some rain is forecast for both countries next week, which could disrupt harvesting.

After a very dry spring, rains have arrived at just the right moment for the French corn crop. France's harvest therefore looks set to be good in terms of yield and timing.

We forecast an 8% increase in yields when compared to the norm: even though the acreage is small, production should reach 13.5m tonnes.

Gary Phillips, ODA


Oilseeds Market

Improving US weather puts pressure on prices

A sharp drop in soybean prices has put pressure on oilseeds globally this week due to improving weather conditions in the Midwest US which has been parched for some time, as well as an improvement of soybean crop ratings to 59% "good" to "excellent".

Harvest in the UK has been stop start this week as rains have been falling, although yields thus far look fairly promising on the whole.

In Europe, Stratégie Grains increased its EU rapeseed crop estimate by 800,00 tonnes to a level now 8% above last year's harvest. This is following better-than-expected harvest results, particularly in France but also the UK and Romania.

Crude oil put pressure on the oilseeds this week as West Texas Intermediate (WTI) slid from a two-month high following an industry survey showing Opec increasing production in July.

Risks remain in Canada and Australia for canola, with dry conditions prevailing and production reductions looking likely.

James Bolesworth, CRM AgriCommodities

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