London Wheat Down On Firm Pound, Rising Imports
12/02/14 -- EU grains finished mixed, although London wheat was lower across the board as sterling firmed after the Bank of England hinted at a UK interest rate hike, and new data showed that UK wheat imports rose in December.
The session closed with Mar 14 London wheat ending down GBP1.80/tonne at GBP151.70/tonne, whilst new crop Nov 14 London wheat ending GBP0.80/tonne easier at GBP145.80/tonne. Mar 14 Paris wheat was flat at EUR195.75/tonne, Mar 14 Paris corn was down EUR0.25/tonne at EUR173.25/tonne, whilst May 14 Paris rapeseed jumped EUR3.25/tonne to EUR376.75/tonne.
The pound rose close to 1.66 versus the US dollar and over 1.22 against the euro as the BoE suggested that a rise in UK base rates, from the historic low of 0.5% where that have been stuck since 2009, might not be too far away.
Contrary to predictions from Defra, UK wheat imports didn't continue to slow in December, they rose. Latest figures show that the UK imported 163,602 MT of wheat in the final month of 2013, up 26% on the 129,558 MT shipped in a month previously.
The leading suppliers were Canada (68,763 MT), followed by Bulgaria (25,597 MT), Denmark (19,811 MT) and Germany (19,423 MT).
That takes July/December wheat imports to 1.343 MMT, similar to the 1.337 MMT imported in the same period in 2012/13 (and imports that season topped 2.9 MMT). Defra currently only has UK wheat imports for the entire 2013/14 marketing year down at 1.63 MMT, and there's still 6 months worth of numbers to account for.
Clearly, it would seem that this estimate is woefully inadequate. In addition, as mentioned previously, it would also appear that UK wheat demand is meanwhile being overstated, particularly from the bioethanol industry but also usage within the feed industry.
The 2013/14 UK wheat supply and demand balance sheet may therefore prove to be nothing like as tight as many, led by Defra, seem to currently think.
Jordan passed on a tender to import 100 TMT of optional origin feed barley.
FranceAgriMer held steady on it's estimate for French soft wheat exports outside the EU at 11.5 MMT despite the recent "lock out" from Egypt. They trimmed slightly their view on exports within the EU from 7 MMT to 6.8 MMT, and pegged 2013/14 ending stocks at 2.85 MMT versus 2.68 MMT previously.
Russia only managed to buy a couple of hundred tonnes of grain in it's latest round of intervention purchases, a new low. When buying for the intervention fund began in October the prevailing exchange rate for the rouble versus the US dollar made the government's buying price the equivalent of around $190/tonne. The subsequent demise of the Russian currency makes today's price more like $178/tonne, hence the lack of enthusiasm to sell to the government. Potentially this means more Russian grain coming onto the export market.
Russia exported 1.15 MMT of grains in January, down sharply from 2.43 MMT in December, although that might at least partly be down to adverse weather conditions last month. Even so, that total is still up versus 435 TMT in January 2013.
Wheat accounted for 60% (versus 63% in December) of total grain exports last month and corn a further 36% (versus 28%).
