EU Grains Mostly Higher On Ukraine Worries, Wetness, Strong Exports

20/02/14 -- EU grains finished mostly higher, supported by tensions in Ukraine, excessive wetness in parts of western Europe and the continued strong export pace.

The session closed with Mar 14 London wheat ending up GBP0.40/tonne at GBP154.50/tonne, and with new crop Nov 14 London wheat closing GBP0.70/tonne higher at GBP149.00/tonne. Mar 14 Paris wheat was down EUR0.25/tonne to EUR198.75/tonne, Mar 14 Paris corn was up EUR1.00/tonne to EUR174.25/tonne, whilst May 14 Paris rapeseed jumped EUR7.75/tonne to close at EUR389.00/tonne.

The trade is pondering whether the civil unrest problems in Ukraine will have a negative impact on their anticipated record grain export program this season. Whilst there is little evidence that this has been the case so far, some reports suggest that they still have around 3 MMT of wheat sold, and as yet unshipped. The volume of corn unshipped is likely to be significantly higher than that too.

Farmers and merchants in Ukraine appear to have understandably "shut the shop" for the time being until the situation improves, restricting the movement of grains. As and when things do improve however you could make a case that there could then be a sudden upswing in exports, particularly given the recent weakness of the local currency, the Ukraine hryvnia.

MDA CropCast cut their forecast for the 2014 EU-28 wheat crop by 560 TMT from last week citing excessive wetness in northen Italy, western Spain, western France and the UK. Their estimates for EU-28 barley and oilseed rape production were left unchanged.

Brussels announced another bumper week of exports, granting licences to ship 756 TMT of soft wheat. That takes the 2013/14 marketing year total to 19.3 MMT, up 52% versus this time last year. Corn import licences came in at 352 TMT, and now total 8.1 MMT for the season so far versus 7.6 MMT twelve months ago.

Canada is suffering logistical problems getting its record wheat and canola crops to market, due to problems with their infrastructure. Things haven't been helped by much colder than normal temperatures across the winter.

Tunisia seeks 67,000 MT of milling wheat and 59,000 MT of durum wheat of optional origin for March-April shipment. Algeria are tendering for 50,000 MT of optional origin barley for March/April shipment.

Temperatures across most of Europe and into the FSU look set to remain warmer to much warmer than normal across the next few weeks. Despite some localised flooding issues, many will be starting to think about making an early start with spring planting.

The USDA forecast the US wheat area at 55.5 million acres, down from 56.2 million last year and last week's baseline projection of 57 million. Despite that, they only forecast US wheat prices to average $5.30/bushel in the 2014/15 season. Corn prices are seen averaging only $3.90/bushel and soybeans $9.65/bushel. All those are significantly below current forward levels.