EU Grains End Mixed, But Higher Across The Board For The Week

17/04/14 -- EU grains finished a holiday shortened week mixed. There may have been an element of profit-taking to today's trade, after Paris wheat hit 11-month highs earlier in the week, ahead of a 4-day weekend. Who knows what might have happened in Ukraine by the time European markets re-open on Tuesday morning?

Russia's President Putin said that he has a right to send troops into Ukraine, but that he hopes that he does not have to use that right. He's not a man noted for his patience, warning the Ukrainian authorities of "the abyss they're heading into" on Russian TV, after three pro-Russian separatists were killed and a further 13 wounded in fighting in Eastern Ukraine overnight.

May 14 London wheat closed GBP0.10/tonne lower at GBP170.15/tonne, and with new crop Nov 14 London wheat up GBP1.65/tonne at GBP161.50/tonne. May 14 Paris wheat closed EUR1.00/tonne weaker at EUR217.50/tonne, Jun 14 Paris corn was down EUR1.50/tonne at EUR188.00/tonne and May 14 Paris rapeseed fell EUR0.25/tonne to EUR423.75/tonne.

For the week, that puts May 14 London wheat GBP3.15/tonne higher, and with new crop Nov 14 up GBP6.25/tonne. Paris May 14 wheat ended the week EUR7.75/tonne higher than it began it, with Jun 14 corn up EUR1.00/tonne and May 14 rapeseed EUR6.75/tonne firmer.

Strategie Grains increased their forecast for EU-28 soft wheat exports this season by 1.2 MMT to a record 26.8 MMT - Brussels confirmed yesterday that they'd already granted 24.3 MMT worth of soft wheat export licences so far this season. With ten weeks of the 2013/14 season remaining, this estimate means soft wheat exports only need to average 250 TMT/week between now and the end of June, which looks easily achievable.

The French analyst also raised their 2014/15 EU-28 soft wheat export estimate by 0.5 MMT to 22.9 MMT.

On the production side of things, Strategie Grains trimmed 0.5 MMT off its 2014/15 EU-28 soft wheat crop estimate to 137.2 MMT, although that is still 2 MMT more, or 1.5%, than a year ago. The cut was largely due to higher than expected winter losses in Lithuania, they said. The current 2013/14 season's soft wheat ending stocks are seen similar to year ago levels, they added.

They also forecast the EU-28 corn crop at 65.1 MMT, down 100 TMT from last month, but 1% higher than last year. Ukraine new crop corn is attractively priced, which could put European corn prices under downward pressure later in the year, they suggested.

Their EU-28 barley production estimate was raised 0.5 MMT from last month to 55.9 MMT, although that's still a 6% decline on last year's crop which was boosted by unusually high spring barley plantings. This month's increase was partly due to a higher barley acreage estimate in Lithuania following failed winter wheat, they said.

Toepfer forecast the 2014/15 German wheat crop at 23.95 MMT, down 3.7% versus 24.87 MMT last year. They estimated the German rapeseed crop at 5.43 MMT, down 6% versus 5.76 MMT last year.

Sterling rose to it's best levels against the US dollar since August 2009 today, and hit it's highest trade weighted index against a basket of global currencies since late 2008, on the notion that UK interest rates will start to move up again late this year or in the early part of 2015. With the UK looking likely to be returning to a "normal" wheat production year in 2014/15, a strong pound will not be an aid to export ambitions in the season ahead.