EU Grains Recover A Little Lost Ground

29/01/15 -- EU grains closed mostly higher in what I guess you could call a correction or consolidation from yesterday's thrashing. It would be a brave man who'd say that they market appears to have established a bottom though.

At the finish, Mar 15 London wheat was up GBP1.00/tonne to GBP123.25/tonne; Mar 15 Paris wheat was EUR0.25/tonne higher at EUR197.75/tonne; Mar 15 Paris corn was EUR0.50/tonne firmer at EUR153.00/tonne; Feb 15 Paris rapeseed was up EUR2.50/tonne to EUR341.50/tonne.

The latest slump in prices has at least flushed out a few buyers. Saudi Arabia are tendering for 660,000 MT of 12.5% hard milling wheat for Apr/May shipment, and Jordan bought 100,000 MT of hard wheat of optional origin.

There are other tenders around from various North African and Middle Eastern buyers too. Egypt remain out of the market though. This may be because of some new rules on moisture requirements due from GASC are due to be set next week, I hear.

Also due next week is a decision from India whether to release 0.5-1.0 MMT of surplus wheat stocks onto the global market. The Indian government were said to hold 25.1 MMT of wheat stocks as at Jan 1, which is far more than the required minimum buffer stock of 11.2 MMT. The only problem is that the government will be making a loss if they want to offload some of this excess onto the market now. The Indian 2015 harvest is only a few months away.

At home, Defra increased their forecast for Human and Industrial wheat usage in the UK this season by 182,000 MT to a record 7.99 MMT, which is up 7.7% on last year. Increased demand from the bioethanol industry is what they are forecasting, despite some questioning the current viability of the industry given the acute weakness in the global oil and ethanol markets.

They trimmed a bit off the UK's 2014/15 exportable surplus, but at 3.46 MMT this still represents the largest since 2008/09.

In addition they raised their forecast for UK corn imports by 231,000 MT to 1.36 MMT.

The Russian government continue to have little success in purchasing grain for their intervention fund, they only managed to procure 5 TMT yesterday, taking the total bought so far to just 340 TMT.

The complicated minutiae of the agreement between the Ukraine government and traders on exports has emerged. There's to be a Jan/Jun limit of 4.6 MMT on wheat exports, split 1.2 MMT milling wheat and 3.4 MMT feed wheat. The cap for the season for all wheat is 12.8 MMT.

There's also a tight 600 TMT Jan/Jun limit on barley exports, and an overall season cap of 4.2 MMT.

Ukraine has currently shipped 8.6 MMT of wheat and 3.7 MMT of barley this season.