EU Grains: Same Story, Different Day

15/09/14 -- EU grains closed mostly lower, and at fresh 4-year lows in the case of London and Paris wheat and Paris corn.

The day ended with Nov 14 London wheat down GBP0.45/tonne to GBP112.00/tonne, Nov 14 Paris wheat closed EUR1.25/tonne lower at EUR162.00/tonne, Nov 14 Paris corn was down EUR1.75/tonne to EUR138.50/tonne, whilst Nov 14 Paris rapeseed was EUR2.00/tonne higher at EUR323.50/tonne.

Russia's 2014 grain crop just keeps getting bigger. SovEcon today raised their forecast from 98 MMT to 104-106 MMT, the second largest of the post-Soviet era, beaten only by output in 2008. Wheat production this year was raised from 58 MMT to 60 MMT. Note that these are also clean weight estimates.

The Russian Ag Ministry said that the country had harvested 85.1 MMT of grains so far off 68.5% of the planned area. That compares with a harvest of only 69 MMT this time a year ago.

Wheat accounts for 52 MMT of this year's total so far (off 68.3% of plan), with barley adding a further 19.1 MMT off 82.5% of plan.

The 2014 Russian corn harvest meanwhile is now 15.6% complete at 2.1 MMT, they added.

The Russian Ministry said that Sep 1-10 grain exports were 975 TMT, including 805 TMT of wheat and 112 TMT of barley. That takes total exports so far this season (Jul 1 to Sep 10) to 8.75 MMT, including 7.69 MMT of wheat and 910 TMT of barley.

Ukraine's exports are also going well. APK Inform said that the country exported 770 TMT of grains last week, up from 540 TMT the previous week. That total included 404 TMT of wheat and 363 TMT of barley. Their new crop corn harvest is just starting to hit the market, with Agritel reporting offers for that FOB Odessa are now down to $172/tonne, which is only around GBP106/tonne sterling equivalent.

That could change though if the "yes" vote wins Thursday's Scottish referendum. Some analysts are saying that such an eventuality could send the pound reeling, sustaining losses of 10-15%, which would support London wheat and make imported corn and other grains considerably more expensive. It would also help with UK export ambitions.

A "no" vote on the other hand would have the opposite effect, although few are predicting a 10-15% upside for the pound should that happen.

With a seeming 50:50 chance that the vote could go either way, it may be worth UK arable growers sitting on their hands for a few more days, rather than biting the bullet at these loss making levels anyway.

In other news Saudi Arabia bought 610 TMT of hard wheat for Dec/Jan shipment over the weekend. Acceptable origins are European, North or South American and/or Australian.