EU Grains Mostly Higher, But Little Changed On The Week

Posted by Nogger - a legend in his own mind at 14:30 | Categorized as

22/08/14 -- EU grains closed mostly a little higher on the day, following Russia's decision that it had been kept waiting long enough and it's 'aid' convoy was crossing the Ukraine border whether Kiev and the West liked it or not.

The day ended with Nov 14 London wheat up GBP1.40/tonne at GBP122.25/tonne, Nov 14 Paris wheat was up EUR2.25/tonne at EUR173.75/tonne, Nov 14 Paris corn was down EUR0.50/tonne at EUR152.75/tonne and Nov 14 Paris rapeseed rose EUR1.25/tonne to EUR324.75/tonne.

Despite the generally higher close there wasn't a great deal of change for the week, with London wheat GBP0.85/tonne lower, Paris wheat unchanged, corn down EUR1.75/tonne and rapeseed up EUR3.00/tonne.

For the London market in particular the trade is still awaiting a clearer idea on UK production this year, with some estimates as high as 17 MMT, which would be the second largest crop on record. This week's yield estimate from the HGCA however suggests that 16 MMT may be closer to the mark.

That's still not a bad return, and equates to a lot of feed wheat looking for a home, especially with the anticipated much larger EU feed wheat crop on the way and a big corn crop coming too.

For now though the market seems to have found it's level, and has managed to resist a fall below GBP120/tonne. The next big test to see if it can hold that price could come when new crop corn comes along.

We've seen a touch of sterling weakness of late too, which may be helping London wheat a little. You may not have noticed it, I certainly hadn't until I read about it today, but the pound has now fallen for seven straight weeks against the US dollar - its longest losing run since 2008. Whilst not exactly a "fall out of bed" it's lost nearly 3.5% of its value versus the dollar in that time, albeit from a starting point that was a 6-year high back at the beginning of July. We've also seen some modest weakness against the euro too during the past few weeks.

Elsewhere, Brussels issued 600 TMT of soft wheat export licences this past week, taking the marketing year-to-date total to 3.1 MMT. That's not too far behind last year's pace of 3.2 MMT as of this date. Cumulative barley exports are well down however at 1.4 MMT, a fall of 30% on a year ago. They've also granted 1.85 MMT worth of corn import licences to date in 2014/15.

A special preferential deal with Ukraine to allow 400 TMT of duty free corn imports into Europe this year has already been fully subscribed. They were also granted 101.5 TMT worth of wheat import licences this week, taking the total volume issued so far to 767.7 TMT out of a quota of 950 TMT that lasts until the end of October.

Oil World increased their forecast for the EU-28 rapeseed crop this year from a previous estimate of 23.1 MMT to a revised 23.5 MMT, a 10.85% increase on last year's harvest and a new record high volume.

FranceAgriMer said that the French wheat harvest was 97% complete as of Monday, and that the spring barley harvest was 96% done. There's not been much advancement on a week previously there. The rains that are slowing the early grain harvest look to be a positive boon for the corn crop though. The French analysts rated that at 86% good/very good, up a point on last week and fully 32 points ahead of this time last year.

Russia's Ag Ministry said that the country's 2014 grain harvest had now past the 70 MMT mark in bunker weight, and all that off little more than half (50.9%) of the anticipated area. Yields have so far averaged 2.96 MT/ha, an increase of nearly 18% on last year. Yields are however dropping off now that the harvest is getting going in Siberia, which is now 8% harvested and yields are only averaging 1.77 MT/ha, a 10% decline on a year ago.

The Ag Ministry say that the country will harvest "not less than 100 MMT" of grains this year versus 91.3 MMT in 2013. Wheat prices in Russia are said to have risen a little of late, partly as the initial harvest pressure has dissipated - those that had to sell have done so - and also due to weakness of the rouble due to the economic sanctions imposed against them by the West.

Russia's Ag Ministry said that the country will export 25-27 MMT of grains in 2014/15, versus a previous estimate of 25 MMT, and that the state will also buy 5 MMT on the domestic market to boost government stocks.