EU Grains Stuck In Sideways Trade
17/12/13 -- EU grains closed mostly lower with Jan 14 London wheat ending down GBP0.30/tonne at GBP164.00/tonne whilst Jan 14 Paris milling wheat ended unchanged at EUR208.00/tonne. Feb 14 Paris rapeseed fell EUR2.75/tonne to EUR363.75/tonne, whilst Jan 14 Paris corn rose EUR1.00/tonne to EUR173.50/tonne.
With the possible exception of the odd blip we are essentially still stuck in sideways trade. Demand for EU wheat remains strong, but global production is higher than it's ever been, and so to is that of corn.
Few appear to have strong conviction as to whether 2014 will bring a re-assertion of negative influences driving prices to new lows, or if a new year might bring a renewed appetite for spec money to come flooding back in for grains.
Currently the fundamentals would appear to edge on the side of generally lower prices to start 2014.
The firmer euro might impede a continuation of the very strong early pace of EU wheat exports. News late in the day that Egypt had bought one cargo each of Russian and Romanian wheat, with French and German origin missing out may have disappointed that market. Cheaper Black Sea sellers appear to still have the ability to wring out the odd cargo and undercut the French into the world's largest wheat buyer when the chips are down.
"Wheat prospects this season in Western Europe are much improved over last year, but in Eastern Europe conditions are worse. This analysis is based on vegetative growth October 16-31 obtained via remote satellite (click map to enlarge).
"Autumn wheat development is very often a good indicator for the final crop yield. The top 3 wheat producing countries are located in Western Europe: France, Germany and United Kingdom together making up 75.5 MMT of EU-wheat production against only 24 MMT in Eastern European wheat - the combined amount from Poland, Romania, Bulgaria and Hungary.
"Therefore, while Eastern European wheat potential is reduced relative to last season, the outlook for the European Union at large is better than a year ago," said Martell Crop Projections.
Russia bought 25,110 MT of grains for it's intervention fund today, taking the total purchased so far this season to 510,570 MT - which is mostly wheat (84,915 MT is barley).
IKAR said that Russia's 2013/14 grain exports currently include 11.4 MMT of wheat and 1.2 MMT of corn. Offers of 12.5% Russian milling wheat FOB the Black Sea are around $295/tonne, they say.
Russia's Nov 1 grain stocks were up 10.3% on last year, with on farm inventories 27.8% higher, according to the Russian Ministry.
Ukraine's Ministry say that 92% of winter grains are in good/satisfactory condition (the equivalent of 7.1 million hectares). The corn harvest there is now 99% complete at 29.897 MMT, taking this year's total grain output to a record 63.5 MMT they add.
Tunisia are in the market to buy 134 TMT of durum wheat and 109 TMT of soft wheat. Jordan is in the market for 100 TMT of wheat as well.
