EU Grains Crash To Fresh Lows

22/09/14 -- EU grains crashed to fresh lows with Nov 14 London wheat down GBP1.05/tonne at GBP110.50/tonne, and Nov 14 Paris wheat closing down EUR2.25/tonne to EUR151.25/tonne. Nov 14 Paris corn was down EUR2.75/tonne to EUR134.25/tonne and Nov 14 Paris rapeseed slumped EUR7.75/tonne to EUR310.50/tonne.

Both London and Paris wheat fell below support at GBP110/tonne and EUR150/tonne, before eventually clawing their way back up above those levels at the close. It remains to be seen if they can manage to stay there for the remainder of the week.

Of the main four grains only Paris rapeseed didn't set a fresh more than 4-year low for a front month, and that only managed to do so by EUR1.50/tonne.

Egypt's GASC bought one cargo of US wheat in a weekend tender, with French, Russian and Romanian wheat all out-priced. There was perhaps a mixture of surprise and disappointment that French wheat didn't figure

The Paris wheat contract also remains under pressure as the market questions its legitimacy to command such a premium over feed wheat given the poor quality of this year's French crop and the fact than wheat with a hagberg level as low as 170 is still deliverable against the contract.

At least it is deliverable in theory. One of the two delivery points in Rouen is already full. Open interest in the Nov 14 contract is the equivalent of around 7 MMT.

Russia said that it had harvested 90.8 MMT of grain with 25% of the crop still to be cut. That total includes 54.8 MMT of wheat, leaving them on target to achieve a final output in excess of 60 MMT after cleaning and screening, even allowing for lower yields from Siberia and the Urals region.

Russia’s Ag Ministry said that the country had exported 9.9 MMT of grain between July 1st and Sept 17th, a rise of 26% from a year ago. That total includes 8.6 MMT of wheat.

Russia's competitive edge now seems to have eroded though, judged on recent GASC tenders. Europe and the US are now playing catch-up it would seem, with both needed to make room for their impending record large corn crops.

Heavy rain is now stalling what's left of the Russian grain harvest, although it will be a welcome boost for newly planted winter grains. That crop, for the 2015 harvest, is already 60% sown on 9.9 million hectares.

The Kazakh harvest meanwhile is 58% complete at 9.5 MMT. The Ag Ministry there forecast a final 2014 harvest of 14-15 MMT, down from 18.2 MMT a year ago, with exports seen at 8.6 MMT.