EU Grains Mostly Higher, Brexit Talk Sees Pound At 7-Year USD Low

22/02/16 -- EU grains finished the day mixed, but mostly a touch higher. London wheat got bit of help from widespread Brexit coverage in the media over the weekend - and again today.

At the close of trading, Mar 16 London wheat was up GBP0.95/tonne at GBP105.20/tonne. In Paris, Mar 16 wheat was up EUR1.00/tonne at EUR153.00/tonne, Mar 16 corn was up EUR0.50/tonne at EUR146.50/tonne and May 16 rapeseed rose EUR2.00/tonne to EUR355.75/tonne.

The pound hit a fresh near 7-year low against the US dollar, falling close to 1.4050 at one stage, as it was revealed that Boris Johnson is advocating leaving the EU.

For all the talk of the BoE following the US Fed higher on interest rates early in the new year that abounded less than 6 months ago, many pundits are now factoring in years before UK interest rates begin to rise again.

"Moody's said it would consider downgrading the UK's credit rating if the country voted to leave the EU," the BBC reported. Fitch agency were more cautious however, they noted.

Current polls put the chance of a "leave" vote ate being pretty remote - although things con change between now and June and the last General Election polls didn't prove to be too accurate.

Whatever, it all creates a feeling of uncertainty, which looks like keeping the pound weak.

Whether a weaker sterling helps UK wheat exports too much though remains to be seen.

French wheat was comfortably the cheapest offer in yesterday's GASC tender, so there's ground to be made up there.

News that FranceAgriMer peg their 2015/16 ending stocks at a 17-year high, with exports falling 6% underlines the stiff foreign competition angle.

Don't for get too that the French analysts also rated winter wheat conditions there at 94% good to very good, and that plantings for the 2016 harvest are forecast at the highest levels since the 1930's.

Elsewhere, Ukraine said that winter grain germination rates were 92% and that 67% of these crops were in good to satisfactory condition. That leaves an area of a third (2.2 million ha) rated as weak/thinned. The figures for winter OSR are very similar.

Russia said that it's season to date grain exports were 23.814 MMT, including 17.755 MMT of wheat - a 5% decline on a year ago.