EU Grains Generally Lower, But Weak Sterling Supports London Wheat

04/02/16 -- EU grains closed mixed, but mostly lower. London wheat got a bit of support from a weaker sterling.

At the finish, front month Mar 16 London wheat was up GBP0.95/tonne at GBP106.75/tonne, Mar 16 Paris wheat fell EUR0.50/tonne to EUR158.75/tonne, Mar 16 corn was EUR0.75/tonne lower at EUR152.50/tonne and May 16 rapeseed was down EUR0.50/tonne to EUR362.50/tonne.

The pound was down as ideas of a UK interest rate rise any time soon got pushed even further onto the back burners than they already had been.

One leading analyst told the BBC that in his opinion the BoE's understanding of why inflation was so low had been "poor".

Deflation, not inflation, carries the greater risk. "I think part of that criticism is about the whole case for forward guidance given the fact we live in a world which is highly unpredictable and where external forces can derail your economic forecasts pretty quickly," he noted.

Talking of external influences affecting your market, we've had quite a few examples of those in Ag Commodities in recent years. Following China's bid for Syngenta yesterday can we conclude that they are finally relaxing their attitude on GMO's? If they are looking to increase domestic production by going down that route then it could certainly have a negative impact on imports.

Elsewhere today, the FAO upgraded world wheat production in 2015/16 by 2.3 MMT on the back of larger than last anticipated harvests in Canada and Russia.

"Trade in 2015/16 raised by 2 million tonnes but still remaining below the previous season’s level, mainly because of smaller expected imports by Morocco, Iran and Turkey," they said

Stocks (ending in 2016) were lifted by 3.8 MMT on larger inventories in Argentina, China, Russia and Ukraine -these are now expected to reach their highest level in 13 years, they added.

Looking at production prospects for 2016/17 "in the EU, the extremely mild weather of last December delayed the hardening of winter crops and intense cold temperatures in January combined with shallow snow cover caused some frost damage in eastern Europe," they noted.

"In Ukraine, there is concern as conditions prior to winter dormancy were worse than average due to severe autumn dryness, which caused planted area to be down. Winter damage will be assessed in the spring," they said.

The Ukraine Weather Centre said that current warmer than normal conditions should prevail through to at least mid-Feb. They rate 2/3rds of Ukraine's winter grains as being good to satisfactory, with one third weak/thinned.

The Ukraine Ministry said that the country had exported 23.85 MMT of grains so far this season, with wheat accounting for 11.07 MMT of that total, corn 8.69 MMT and barley a further 3.94 MMT.

Isreali buyers were said to have booked 80,000 MT of optional origin corn and 18,000 MT of optional feed wheat in private tenders.

MDA CropCast estimated the EU-28 rapeseed crop in 2016/17 down 11% at 20.46 MMT, with plantings down 3.8% and yields 7.8% lower.