EU Grains Mostly Lower, Strong Pound Weighs On London Market
02/07/14 -- EU grains closed mostly lower, with nearby Jul 14 London wheat sliding to a new lowest close for a front month in 4-years and Nov 14 setting a fresh contract lifetime low of GBP133.50/tonne.
The day ended with Jul 14 London wheat down GBP1.50/tonne at GBP134.00/tonne, and with new crop Nov 14 GBP0.25/tonne lower at GBP134.25/tonne. Nov 14 Paris wheat was unchanged at EUR184.25/tonne, Aug 14 Paris corn slipped EUR0.25/tonne to EUR169.75/tonne and Aug 14 Paris rapeseed finished EUR3.00/tonne weaker at EUR337.25/tonne.
It is worth noting the recent movements of the Nov 14 and Nov 15 London wheat future. The latter contract was a GBP0.50/tonne discount to Nov 14 at the end of March, and tonight it's a GBP8.75/tonne premium.
The weak euro, and concerns that milling wheat quality may have been harmed by rain in some parts of Europe, added a little bit of support to Paris wheat.
London wheat remains under pressure from the very strong pound and ideas that less milling wheat in some places, particularly Eastern European countries, means more feed wheat around. And that's more feed wheat in the hands of traditionally eager post-harvest sellers. Corn meanwhile continues to pour into Europe if last week's import licences are anything to go by.
Better construction figures than the market expected and news that UK house prices had now surpassed the 2007 peak, helped and already buoyant pound. Nationwide said that UK house prices are now up 11.8% on a year ago. London house prices are up 26% year-on-year, the largest annual increase since 1987, they added.
Both factors supported the pound, and added weight to the argument for rising interest rates by the end of the year. The pound hit USD1.7177 - it's highest levels versus the USD since October 2008 and EUR1.2573 - it's best since October 2012.
Meanwhile the Dow Jones and S&P500 both closed at record highs last night, which continues to see spec money think that there are better financial returns to be had outside of the grains sector.
In other news, a FranceAgricle survey into anticipated French wheat yields found that more than 78% of farmer respondents said that they expected to get average or better yields this year.
French analyst ODA raised their forecast for the EU rapeseed crop to a record 22.5 MMT. Rapeseed yields out of Western France are reported to be showing decent yields of around 3.5 MT/ha, and these are more like 3.5-4.0 MT/ha in the east. Last year's average yield was only 3.04 MT/ha.
Russia's 2014 grain harvest is just getting going, producing 5 MMT in bunker weight so far off 3% of the planned area. Average yields are said to be 3.78 MT/ha, up 8% on this time last year.
The Ukraine Ag Ministry said that the country had exported a record 32.4 MMT of grains in 2013/14, up 41% from a year ago and including 9.4 MMT of wheat, 20.1 MMT of corn and 2.5 MMT of barley.
The Kazakhstan’s Ag Ministry said that their 2013/14 grain exports were 8.709 MMT, up 24% from a year previously.
The French Ag Ministry said that the country's soft wheat exports for the period Jul 13/Apr 14 were up 10% from a year ago at just over 16 MMT.
