EU Wheat Mostly Lower On The Day, Little Changed On The Week

28/02/14 -- EU grains finished mostly lower on the day, but not really that much changed for the week.

The session closed with Mar 14 London wheat ending down GBP0.35/tonne at GBP155.75/tonne, and with new crop Nov 14 London wheat closing GBP0.40/tonne lower at GBP147.50/tonne. Mar 14 Paris wheat was down EUR0.50/tonne to EUR201.25/tonne, Mar 14 Paris corn was down EUR3.25/tonne to EUR169.25/tonne, whilst May 14 Paris rapeseed fell EUR2.25/tonne to close at EUR394.75/tonne.

For the week that puts Mar 14 London wheat GBP0.15/tonne higher, with new crop Nov 14 down GBP1.40/tonne. Front month Paris wheat gained EUR3.00/tonne, Paris corn fell EUR4.75/tonne and Paris rapeseed added EUR1.75/tonne.

One of the main items open for debate at the moment is how will the developing situation in Ukraine pan out, and how will that affect the grain markets going forward.

As ever these things are rarely clear-cut, and it's possible to make out both a bullish and bearish case. Indeed, simply the weakness of the local currency alone could be seen as bullish (as it makes imports of dollar-priced fertiliser and agrochemicals more expensive) or bearish (as it makes selling wheat or corn in dollars an attractive proposition).

On balance though, the bullish factors probably outweigh the bearish ones, and uncertainty on it's own is generally something that the market doesn't like and it frequently prompts a short-covering and/or speculative rally. A quick and peaceful solution to the region's problems could equally prompt a decline in grain prices, especially with the spring planting season just about upon us.

Elsewhere, FranceAgriMer said that 74% of the winter wheat crop there was in good to very good condition, the same as a week ago and 8 points ahead of this time last year. Winter barley rated good to very good fell a point on last week to 71%, although that's still 4 points ahead of last year.

The French winter wheat crop remains quite forward, aided by the relatively mild conditions, with 94% of the crop at the early tillering versus only 82% a year ago. They reported 2% of the crop to be displaying an ear of at least 1 cm long, versus zero a year ago. Aquitaine is the most advanced region where 31% of the crop is already at this stage.

French winter barley is 99% tillering and 1% of the crop has an ear of at least 1 cm long.

Algeria bought 50,000 MT of Argentine barley for March shipment. Israel bought 60 TMT of optional origin corn (possibly Black Sea origin) for May/June shipment.

Egypt bought 5 cargoes of wheat in yesterday's tender, including 4 of the 8 consignments of Russian wheat on offer, proving that the latter isn't out of the market yet - especially with the rouble remaining weak. Romania also managed to dig up a couple of cargoes, one of which was booked.

There are still enough uncertainties around to underpin current price levels, including a US winter wheat crop that will come out of dormancy in far worse condition than it entered it, and of course Ukraine. Further forward though, downside pressure potential does exist as the northern hemisphere harvest draws closer. That will kick off in India, where a record crop is anticipated, in only a matter of weeks.