Spec Money Deserting Grains For Equities

10/06/14 -- EU grains markets were mixed in relatively quiet trade. The strong pound, which traded close to 1.24 against the euro for the first time since late 2012, didn't help London wheat.

The day ended with Jul 14 London wheat unchanged at GBP142.50/tonne, and with new crop Nov 14 London wheat GBP0.80/tonne lower at GBP140.75/tonne. Nov 14 Paris wheat ended EUR0.50/tonne lower at EUR190.25/tonne, Aug 14 Paris corn rose EUR0.25/tonne to EUR177.75/tonne, whilst Aug 14 Paris rapeseed increased EUR2.25/tonne to EUR346.50/tonne.

Fund money seems to be flowing out of the grains sector in favour of perceived better returns from equities. Both the Dow Jones Industrial Average and the S&P 500 closed at all time highs last night. The German DAX also closed above 10,000 for the first time ever yesterday, whist the FTSE 100 trades close to a 14 year high set on May 14.

The Russian Deputy Ag Minister said that this year's harvest (excluding Crimea) would increase 4 MMT on last year to 96.8 MMT, and that the total could be "much higher" given beneficial rains.

The 15-day forecast for Russia is cooler and wetter for much of the country.

Pro Zerno forecast a record Russian oilseed crop in 2014, with winter OSR production of 1.6 MMT versus 1.4 MMT a year ago. They see Russian soybean production at 2.25 MMT compared to 1.63 MMT last year.

The Russian Ministry said that the country had exported 24.7 MMT of grains so far this year (to Jun 4), a 61.4% increase on a year ago. That total includes 17.95 MMT of wheat, 2.51 MMT of barley and 3.93 MMT of corn.

Ukraine's 2013/14 marketing year to date grain exports now stand at 31.62 MMT, including 9.11 MMT of wheat, 2.35 MMT of barley and 19.82 MMT of corn.

Algeria was said to have bought around 200 TMT each of new crop milling wheat and barley in tenders last week. The price paid for the wheat was said to be around $276.50/tonne C&F.