EU Grains End Quiet Session Mostly Lower

29/04/14 -- EU grains finished a quiet day mostly lower, with May 14 London wheat closing GBP0.80/tonne easier at GBP169.00/tonne, and with new crop Nov 14 London wheat down GBP0.60/tonne at GBP158.15/tonne. May 14 Paris wheat closed EUR0.25/tonne lower at EUR214.25/tonne, Jun 14 Paris corn was unchanged at EUR185.00/tonne, whilst expiring tomorrow and very technical May 14 Paris rapeseed jumped EUR8.700/tonne to EUR410.50/tonne.

Improved weather conditions in Europe put the market on the defensive, although other than that fresh news was relatively limited. Concerns over declining US winter wheat crop conditions, and heightened Ukraine tensions, continue to grab the market's interest at the moment too, underpinning downside.

Ukraine said that it had exported 29.35 MMT of grains so far this season, including 18.43 MMT of corn, 8.34 MMT of wheat and 2.26 MMT of barley.

The best two offers in a Lebanese tender for 30,000 MT of milling wheat for May shipment were said to be of Ukraine origin, as their exports continue pretty much unhindered.

The Russian Ag Minster said that the country's winter grain losses were only a maximum of 5% versus a 10-year average of 9.1%. That should at least partially compensate for reduced winter plantings due to wet weather last autumn. Russian growers only sowed 14.7 million hectares of winter grains in 2013 versus 16.3 million a year previously.

US winter wheat crop conditions fell again overnight, although the proportion of the crop rated good/excellent is unchanged from a year go at 33%.

Speculative money still seems to fancy pressing the pedal higher, but this is a very dangerous game and one in which they can change their mind at any time on a whim, as we have seen before.

Bears would note that last year's US wheat crop is in an almost identical condition to this year's, and that corn and soybean plantings are similarly delayed, yet prices fell heavily during the course of the latter half 2013.

A year ago to this day spot CBOT corn closed at $6.84/bushel, only to end the year at $4.22/bushel, for a 38% decline. CBOT wheat fell 14.7% and soybeans by 10.8% during the same period.

Where we will end 2014 only time will tell, but without the intervention of the unexpected Russian seizure of Crimea, and the subsequent problems between Putin and the West, we'd almost certainly see the grain markets significantly lower than where they are now.

The bulls will continue to predict the unpredictable, no doubt.

This doesn't rule out another unforeseen weather/geopolitical issue later in the year, but nor does it factor in a decent crop year for the Black Sea, Europe, Canada or Australia.

As confidence grows in a decent crop year in Europe for 2014, downside potential may well increase on the London/Paris markets. Note that traditionally EU wheat markets often peak in May.