London Wheat Lower, Pressured By Rising Sterling

14/11/16 -- EU grains closed mixed on the day. London wheat was pressured by renewed sterling strength.

The day ended with Nov 16 London wheat down GBP1.00/tonne at GBP136.50/tonne, Dec 16 Paris wheat was up EUR0.50/tonne at EUR162.00/tonne, Jan 17 Paris corn was up a euro at EUR163.25/tonne and Feb 17 Paris rapeseed fell EUR3.25/tonne to EUR389.00/tonne.

The pound is higher after last week's surprise Trump victory. This has sparked market worries that French and German voters might feel empowered to spring a Brexit-esque surprise of their own come their presidential elections in the New Year.

Nov 16 London wheat has risen 18.5% since the Jun 23 Brexit decision. The pound is down 11.5% versus the euro during this time, so I'd say that most of London wheat's rally can be directly attributed to losses in the domestic currency. (The value Dec 16 Paris wheat incidentally is virtually unchanged despite a crop disaster - down EUR2.00/tonne - since June 23).

Where the pound goes for the rest of the year, and beyond, is therefore likely to be the major influence in the value of London wheat in the months that lie ahead.

In other news, Ukraine said that it had now harvested 13 million ha of grains (off 92% of the planted area), producing a crop of 58.4 MMT to date. That includes a corn harvest that's 74% complete at 19.4 MMT.

APK Inform said that Ukraine seaports only exported 463.3 TMT of grains last week, down from 835.9 TMT the previous week. That included 101.7 TMT of wheat, 74.3 TMT of barley and 287.3 TMT of corn.

Russia's seaports exported 578.8 TMT of grains last week, up from 469.4 TMT the previous week. That total included 418.7 TMT of wheat, 2.8 TMT of barley and 151.3 TMT of corn.

Russia's 2016 grain harvest now stands at 121.8 MMT off 95.7% of the planted area. That includes a corn harvest that's 69.1% complete at 11.4 MMT.

Customs data shows that Russia's wheat exports in October were only 1.99 MMT, some 46% down on September and 26.5% lower than they were a year previously. Whilst this can partly be attributed to Egypt's tinkering with their ergot policy, at least some of it is down to rouble appreciation and a shortage of higher quality wheat in Russia this year. Quantity clearly doesn't equal quality in this case.

Late last week Rusagrotrans lowered their forecast for Russia's grain exports in November from 4 MMT to 3.1 MMT. They also clipped back full season projections from 37.0 MMT to 35.4 MMT.

Algeria tendered for 50,000 MT of soft wheat late in the day. The generally buy much more than they tender for. Watch this space.