London And Paris Wheat At Six Week Highs

22/10/14 -- EU grains finished higher across the board, with both London and Paris wheat managing their best closes in 6 weeks. However "although particular factors are lending support to prices, markets are very unlikely to see a significant rally," said the HGCA.

The day ended with Nov 14 London wheat up GBP2.50/tonne to GBP119.00/tonne, Nov 14 Paris wheat ended EUR3.75/tonne firmer at EUR167.75/tonne, Nov 14 Paris corn rose EUR0.50/tonne to EUR143.00/tonne, whilst Nov 14 Paris rapeseed was EUR3.00/tonne higher at EUR323.25/tonne.

The spread between Nov 14 and Jan 15 Paris wheat narrowed for a third day as more nearby shorts are squeezed out. Even so, the open interest in the front month is still large given that contract expiry is only 2 1/2 weeks away.

A partial success for France in last night's Egyptian tender was supportive, even if they did have to share the business with Russia and Romania.

It also confirms that the latter two origins still have wheat to sell, even if they were priced well over the winning French origin bid. That was at least $10/tonne under the other remaining FOB quotes out of France, and the different between those and the successful Black Sea quotes were much closer.

Rosstat said that Russia had exported 16.8 MMT of grain in the Jan-Sep period, almost double the volume shipped out twelve months previously. Wheat accounts for 12.6 MMT of that total, with corn adding a further 2.4 MMT and barley an extra 1.5 MMT.

Rusagrotrans forecast the Russian winter grains planted area at 16.3 million hectares, up more than 7% on last year. They said that this would be similar to the area planted for the 2008 record harvest, although obviously there's a long way to go yet.

Nevertheless, they became the first analyst to dip their toe in the water of 2015, issuing a preliminary grain production estimate for next year of 96-104 MMT.

A sharp cold snap is now in the forecast for Russia (and Ukraine) this week. There's some chatter that although the winter crop has been sown in a timely manner, development has been retarded due to lack of moisture. That's only arrived in the past week, leaving the crop little time to develop before these freezing temperatures come along.

That could have a negative impact on production next year, although it's far to early to see this as a significantly bullish factor at the moment, it warrants keeping an eye on.

The Ukraine wheat crop in 2014 totalled 23.7 MMT, say the Ag Ministry there, a 6.3% rise compared to last year. They say that the proportion of the crop suitable for milling is only 54% versus 75% a year ago.

They see wheat exports in 2014/15 at 11.76 MMT, a 28% rise year-on-year.

Agritel say that the Ukraine corn harvest is progressing quickly and has now reached 15.4 MMT. A crop of 27 MMT is expected this year, according to the Ukrainian Agrarian Confederation.