EU Grains Post Generally Decent Gains As Trade Returns To Normal

05/01/15 -- EU grains closed mostly with some good gains to start the first week of 2015, and a return to "normality" for many traders, despite the fact that fresh news was generally lacking. There wasn't anything particularly bullish that was new, was it therefore simply a case of new month, new year, new money?

At the close Jan 15 London wheat was up GBP2.70/tonne at GBP134.40/tonne; Soon to expire Jan 15 Paris wheat was up EUR0.75/tonne to EUR198.75/tonne (although Mar 15 was up EUR3.75/tonne and May 15 was EUR4.25/tonne higher); Expiring Jan 15 Paris corn was EUR1.50/tonne higher at EUR158.00/tonne (and again slightly further forward months posted much better gains than this); Feb 15 Paris rapeseed was EUR7.50/tonne firmer at EUR355.25/tonne.

The euro fell to a 9-year low against the US dollar following hints that the ECB may soon start a major QE offensive in an attempt to kick-start the eurozone economy, where record low interest rates have so far largely failed.

Political turmoil in Greece also has the single currency under pressure. With the left-wing Syriza party leading in the polls heading into their Jan 25 general election. A victory for them might prompt a default on the previously agreed terms of its international bailout, and possibly lead to a eurozone exit, it is thought.

Further euro weakness therefore seems likely in the coming weeks.

It may also be a factor today that traders sitting back at their desks for the first time in over two weeks in many cases think that the market has fallen a bit too far in thin trade since Christmas Eve. As of Friday night London wheat was down GBP3.65/tonne, with Paris wheat down EUR3.00/tonne, Paris corn down EUR4.75/tonne and Paris rapeseed EUR5.75/tonne lower since then.

This will also have been some traders' first chance to react to the news of the Feb 1 introduction of the new minimum EUR35/tonne Russian wheat export duty.

In other news, APK Inform said today that Russian seaports had exported over 24 MMT of grains in the 2014 calendar year, a 95% rise compared to only 12.3 MMT in 2013. Wheat accounts for 19.1 MMT (80%) of that total, which is more than double the 9.3 MMT shipped out a year previously.

The top exporting ports were Novorossiyk on the Black Sea with 9.9 MMT, followed by Azov with 4.1 MMT, Taman with 2.4 MMT and Rostov with 2.0 MMT, they said.

Ukraine seaports meanwhile shipped 36.4 MMT of grains in 2014, up 54% on 2013. Wheat accounted for 9.4 MMT (26%) of that total versus 6.6 MMT in 2013, with corn contributing 23.2 MMT (64%) versus 14.9 MMT the year previously, they added.