EU Grains Rise, Are The Lows In, Or Is This A Selling Opportunity?
15/10/14 -- EU grains ended the day mixed, but mostly a little higher, following decent gains in the US grains market last night. London wheat now stands almost 8% higher than the 4-year closing low set on the last day of September.
The day ended with Nov 14 London wheat up GBP1.80/tonne to GBP116.75/tonne, Nov 14 Paris wheat closed EUR0.50/tonne lower at EUR158.00/tonne, Nov 14 Paris corn was up EUR1.25/tonne to EUR143.25/tonne, whilst Nov 14 Paris rapeseed was EUR0.75/tonne easier at EUR322.75/tonne.
Are the lows of the season really in? Or is this little rally simply a selling opportunity? Recent history doesn't give us a lot to go on. The lows of the year in London wheat across the last five years have been set in September (2009), March (2010), December (2011), January (2012) and August (2013). Not too much of a pattern there.
The yearly highs incidentally came in January (2009), December (2010), April (2011), November (2012) and January (2013). The high of 2014 also fell within these months being equalled in both March and April (GBP170.25), unless that is you think we will zoom higher than that between now and the end of the year! I suppose you could say that there's a bit more of a trend in evidence there, but not exactly one around which you could form a trading strategy.
Meanwhile the old adage of "big crops keep getting bigger" seems to be holding true in the case of America, Europe and Russia.
Coceral yesterday estimated the EU-28 wheat and corn crops at a record 155.3 MMT and 72.79 MMT respectively. The USDA currently tell us that the US corn and soybean crops will come in at a record 367.68 MMT and 106.87 MMT respectively, and many think that both could end up even higher yet.
The Russian Grain Union today estimated the 2014 grain crop there at 106 MMT in clean weight, including 60 MMT of wheat, 20 MMT of barley and 13 MMT of corn. The corn figure would be an all time high, and the wheat figure the highest since 2009 and the barley estimate the best since 2008.
The Russian Ag Ministry say that the 2014 harvest there is now 92.4% complete at 104.1 MMT in bunker weight. That includes 60.4 MMT of wheat (off 92.9% of the planned area), 20.8 MMT of barley (96.7%) and 7.6 MMT of corn (62.3%). They also say that winter planting for the 2015 harvest has raced to 93.9% complete on 15.5 million hectares versus only 10.7 million ha this time a year ago.
Ukraine winter grain planting is also well advanced their Ag Ministry told us earlier in the week.
Significantly, Agritel report that Ukraine and central/southern areas of Russia are in for their best rain event of the autumn in the coming days, which should provide a massive boost to germination and crop development ahead of the winter.
Rusagrotrans raised their forecast for Russia's October grain exports from 3 MMT to 3.3-3.4 MMT, which would be a record volume for the month. Russia also set record monthly export volumes in both August (an all time high for any month in fact) and September. They said that Russia's deep water ports exported 1.58 MMT of grains in Oct 1-13, almost matching the 1.69 MMT shipped out in the first 13 days of September.
The Ukraine government said that they are in negotiations with Europe to obtain further preferential duty free grain export quotas in addition to the existing ones (which have already been filled in the case of wheat and corn) that expire on Oct 31. They were previously issued with a quota to export 950 TMT of wheat and 800 TMT of corn duty free to Europe, and are hoping to strike a deal beginning Nov 1, which isn't really what you want to hear if you're an EU grower.
