Paris Wheat Up On The Day And For The Week, Helped By Euro Demise

Posted by Nogger - a legend in his own mind at 10:33 | Categorized as

16/01/15 -- EU grains closed mostly higher, with Paris grains helped by continuing weakness in the euro. The results of yesterday's Egyptian tender again highlighted that French wheat is priced at the most competitive levels on the world stage, so why would prices need to move lower?

The day ended with Jan 15 London wheat up GBP0.80/tonne to GBP126.30/tonne; Mar 15 Paris wheat was up EUR3.25/tonne to EUR197.50/tonne; Mar 15 Paris corn was EUR1.25/tonne higher at EUR159.50/tonne; Feb 15 Paris rapeseed rose EUR3.00/tonne to EUR357.00/tonne.

For the week, Jan 15 London wheat was still down GBP4.90/tonne, although Mar 15 Paris wheat was EUR2.75/tonne firmer. Mar 15 Paris corn fell EUR3.25/tonne versus last Friday and Feb 15 Paris rapeseed was down EUR4.25/tonne.

Brussels announced last night that they'd granted 553 TMT worth of soft wheat export licences this past week, taking the cumulative season to date total to 15.3 MMT, which is 3.8% down on where things stood a year ago. The USDA currently estimate EU all wheat exports to fall by 6% in 2014/15 compared to last season's record.

Brussels also approved that Ukraine could export 950 TMT of wheat, 400 TMT of corn and 250 TMT of barley to the EU in a preferential duty-free deal. The new quota applied for the whole of the 2015 calendar year.

How much of that might be taken up in the remainder of the 2014/15 crop year (Jul/Jun) remains to be seen, as the Ukraine authorities appear to be looking to restrict wheat exports, particularly milling wheat exports, at this moment in time.

The Ukraine Ministry said that the country had shipped 20.5 MMT of grains so far this season, including 8.44 MMT of wheat, 8.10 MMT of corn and 3.73 MMT of barley. In the case of wheat that's around 77% of the USDA's forecast for the season. It's also already 1 MMT more than the USDA's barley estimate for the whole of 2014/15.

The pound settled at a seven year high 1.31 versus the beleaguered euro tonight. Further euro nervousness probably lies ahead, with the Greek elections due next weekend, and an ECB sponsored full-blown quantitative easing programme seemingly just around the corner.

The pound is up almost 2.5% against the euro versus last Friday, which Bloomberg say is its biggest weekly advance in almost two years.

"This has reduced Paris rapeseed futures in GBP/tonne terms and means that UK rapeseed prices are likely to under increased pressure in order to remain competitive in EU markets," said the HGCA. Similar comments might also be applied to UK wheat.

Meanwhile the 55% slump in global crude oil values from the highs of last summer continue to challenge the UK, EU and US bioethanol/ethanol industries to maintain some sort of profitability.