EU Grains Crash Below Support Levels With Apparent Ease

28/01/15 -- EU grains closed sharply lower, crashing below support levels and breaking out of the sideways range that had held in place for most of the month.

At the close, Mar 15 London wheat was GBP3.05/tonne lower at GBP122.25/tonne, Mar 15 Paris wheat was EUR5.75/tonne easier at EUR187.50/tonne, Mar 15 Paris corn was down EUR2.50/tonne at EUR152.50/tonne and Feb 15 Paris rapeseed fell EUR7.25/tonne at EUR339.00/tonne.

This was the lowest close for Mar 15 and the more active May 15 London wheat since Nov 7. "The ease at which May 15 wheat has gone below GBP130 this week demonstrates the sheer lack of technical support in grain markets at present," said the HGCA's Jack Watts.

There wasn't really anything particularly bearish today, so it is disconcerting to end the day with losses of this magnitude.

US wheat futures offered no support whatsoever, closing with double digit losses. "The technical structure of the wheat markets look absolutely awful. New lows on a daily basis add to the defensive tone," said Benson Quinn.

Russia's new export duty kicks in at the weekend, and one or two offers of Russian 12.5% milling wheat for Feb shipment are now being seen in the market. These are said to be at reasonably competitive levels despite the minimum EUR35/tonne tariff.

Rusagrotrans said that Russia would export around 28 MMT of grains this season, which is less than the 31-32 MMT that they originally forecast, directly due to the introduction of the new duty.

That however means that Russian grain ending stocks at end of 2014/15 might hit a record 18 MMT, they said.

The Russian PM said that loans would be made available to farmers to fund their spring planting programme at a preferential 10-12% interest rate.

Ukraine said that 18% of it's winter grains are in a weak/thinned condition, unchanged from a month ago.

UAE bought 40,000 MT of Australian/Canadian wheat in a tender. Lebanon are shopping for 30,000 MT of milling wheat for March shipment. Libya is tendering for 50,000 MT of milling wheat. Iran is set to import 25,000 MT of Turkish durum wheat, according to media reports.