EU Grains Mostly Lower, Is Weak Euro Finally Set To See Exports Pick-Up?

12/11/15 -- EU grains closed mostly a touch lower. Yesterday's partial victory for French wheat in the second GASC tender of the week offers some hope that EU exports might finally be starting to pick up, but there's already a lot of lost ground to make up.

At the close, Nov 15 London wheat was down GBP0.10/tonne at GBP112.90/tonne. In Paris, Dec 15 wheat was EUR2.25/tonne lower at EUR179.25/tonne, Jan 16 corn was EUR0.50/tonne easier at EUR167.00/tonne and Feb 16 rapeseed fell a euro to EUR374.75/tonne.

There are signs that last week's mini-wobble for sterling against the euro may only have been temporary. The pound hit 1.42 against the single currency today before falling back a little, but a test of the 1.43-1.44 region could be on the cards over the coming weeks it is thought.

That should facilitate a pick up in euro-priced wheat exports into the second half of the season, although these are currently well behind where they were a year ago.

Brussels announced that they'd issued 401 TMT worth of soft wheat export licences this past week, up by more than a third from slightly less than 300 TMT a week ago. Still, the cumulative season-to-date total still lags the pace of a year ago by 31% - and the USDA this week suggested that figure would be less than -7% come the end of the season.

Highlighting the concern over exports, FranceAgriMer today added 400,000 MT to their forecast for French soft wheat ending stocks this season to 5.2 MMT, more than double what they were at the end of 2014/15.

FranceAgriMer estimated the country's 2015/16 barley stocks at 2.0 MMT versus a previous estimate of 1.7 MMT. They see corn carryout unchanged from previously at 2.3 MMT.

Of course, if euro weakness does continue into at least the first half/quarter of 2016 as many analysts are predicting, then it still won't help UK wheat exports- quite the opposite in fact.

"Unfortunately, the UK is suffering from both poor trade progress to both EU and non-EU countries and indeed was a net importer of wheat for the first quarter (Jul-Sep) of 2015/16. In July-October 2014, the UK had exported around 135 TMT of wheat to North Africa plus 26 TMT to the US. This season, non-EU export licenses issued to the UK were less than 6 TMT by end-October, indicating a far more restricted non-EU export campaign to date," note the HGCA.

Jordan bought 100,000 MT of optional origin wheat for January shipment and are tendering for a similar volume of option origin barley for April shipment. The results of an Algerian wheat tender for January shipment are imminent.

Ukraine weather conditions meanwhile are improving, although it is now very late in the day for winter grains it has to be said. Temperatures are forecast as much as 5C above normal for the time of year across the next 14 days, and rains are also expected. This should benefit crops ahead of dormancy, although an estimated 30% of the winter wheat sown area has yet to emerge, according to Agritel.

The Ukraine Ag Ministry said that the country's 2015 corn harvest now stands at 20.27 MMT off 89% of the planned area. That takes this year's total grain harvest to 58.15 MMT versus 60.37 MMT this time a year ago.

Russia's corn harvest is said to be 85.2% complete at 11.9 MMT. Winter grain plantings there are 400,000 ha behind last year's pace at 16.2 million ha.