EU Grains Mixed, Ukraine Tensions Support For Now

23/04/14 -- EU grains closed mixed as the market attempts to balance ever changing tensions in Ukraine with a weakening global fundamental outlook, and as harvest 2014 draws ever closer.

The day ended with May 14 London wheat up GBP0.40/tonne to GBP167.90/tonne, and with new crop Nov 14 London wheat closing GBP0.70/tonne firmer at GBP157.40/tonne. May 14 Paris wheat closed unchanged at EUR214.75/tonne, Jun 14 Paris corn was up EUR1.00/tonne at EUR184.75/tonne, whilst May 14 Paris rapeseed slumped EUR6.75/tonne to close at EUR415.50/tonne.

"Russia will respond if its interests in Ukraine are attacked," the Russian Foreign Minister Sergei Lavrov was quoted as having said, drawing parallels with the 2008 Georgian war, the BBC reported.

The situation there is clearly far from resolved just yet.

The Ukraine Agribusiness Club said that local prices in the domestic hryvnia are at all-time highs, although the local currency has slumped violently since the Russian taking of Crimea. Prices of 3rd grade milling wheat are up 22.7% versus a year ago, and feed wheat prices are up 14.2%, they said. However, the rapid depreciation of the hryvnia means that growers there are seeing no benefit to these local price increases, they added.

The Ukraine Ag Ministry estimated Ukraine’s 2013/14 grain exports at 33.0 MMT versus the near 29 MMT shipped abroad so far.

Kazakhstan said that they had exported 7.3 MMT of grains so far this year, and that 2013/14 exports would total 9.5 MMT (versus a previous estimate of 9.0 MMT).

Iran were reported to have bought 60,000 MT of Russian wheat in a tender.

The Moroccan Ag Ministry estimated their 2014 cereal harvest at 6.7 MMT, including 3.7 MMT of wheat. Last year's cereal harvest was said to be 9.7 MMT, with a wheat output of 7 MMT.

Nevertheless, Morocco said that it will end the suspension of custom duties on soft wheat imports on April 30th, according to Reuters.

EU crop prospects continue to generally look pretty good. Forecast widespread rains this week across almost the entire continent should prove beneficial.

The market looks tired, but any further escalation of the troubles between Ukraine and Russia could easily see fresh spec money come back into the grains sector, pushing prices higher again.

On the flip side, harvest pressure will soon be upon us. UK grain traders report end-user demand is slack, with buyers appearing well covered for their summer requirements, and relaxed about dipping their toe into the water on new crop. UK growers are estimated to have around 20% of their new crop wheat forward sold.