EU Wheat Sets Fresh Lows On Rising Stocks And Egypt Rejection News

01/02/16 -- EU grains were mostly back in the red again today, save for rapeseed which was mostly a touch higher.

At the finish, front month Mar 16 London wheat was down GBP2.10/tonne at GBP106.00/tonne, Mar 16 Paris wheat fell EUR2.75/tonne to EUR161.00/tonne, Mar 16 corn was EUR2.00/tonne lower at EUR153.00/tonne and May 16 rapeseed was up EUR0.75/tonne to EUR364.25/tonne.

Needless to say this was a new all time contract low for beleaguered Mar 16 London wheat, and the contract now stands less than GBP0.50/tonne away from taking out the May 15 lowest front month close since when as it?

The summer of 2010 that would be: when Apple released the first iPad; Volcanic ash from Iceland brought chaos to the European aviation industry; Wolves, Blackpool, Bolton and Birmingham City were in the Premier League.

Blimey! We must have seen some pretty dramatic changes since summer 2101 then? World wheat production '10/11 was 650 MMT (now 735.4 MMT, +11.6%); world wheat consumption '10/11 was 653 MMT (now 716 MMT, + 9.6%); world wheat ending stocks '10/11 were 198 MMT (now 232 MMT, + 17%).

How does the world corn situation look, now compared with back then? World corn production in '10/11 was 835 MMT (now 968 MMT, +13.7%); world corn consumption '10/11 was 853 TMT (966 MMT), +13.2%); world corn ending stocks '10/11 were 128 MMT (now 209 MMT, +63%).

So on a global level for both wheat and corn production levels have only increased relatively modestly, and rises have been almost matched by those of consumption.

Building ending stocks seems to be the problem, with those for wheat up 17% over the last 5 years (noting that then back in 2010/11 stocks of almost 200 MMT weren't low - they were 30% of consumption).

Corn stocks meanwhile have jumped more than 60% during this period, although the levels seen back in 2010/11 were tight representing 15% of global usage.

Paris wheat hit fresh contract lows also today, helped on it's way by Egypt confirming that it was rejecting a cargo of French wheat found to be containing ergot.

GASC immediately launched a new tender, with the results expected tomorrow afternoon. Who fancies it, and who doesn't (especially given their recent payment problems), and what the prices submitted might be will certainly make interesting viewing.