London Wheat Rises On Sterling Weakness

14/10/14 -- EU grains traded higher, with sterling weakness particularly supporting London wheat.

At the end of the day Nov 14 London wheat was up GBP2.30/tonne to GBP114.95/tonne, Nov 14 Paris wheat ended EUR1.00/tonne firmer at EUR158.50/tonne, Nov 14 Paris corn also rose EUR1.00/tonne to EUR142.00/tonne, whilst Nov 14 Paris rapeseed was EUR1.25/tonne higher at EUR323.50/tonne.

UK inflation dropped to 1.2% in September, down from 1.5% in August and below the 1.4% that the market was expecting. That keeps a lid on the inclination for the BOE to raise interest rates, putting the pound under pressure.

The trade is starting to develop a "the lows are in" vibe, even if of course nobody knows if that is really the case.

The "big crops keep getting bigger" theory continues with some however. Coearal raised their forecast for the EU-28 all wheat crop to 155.3 MMT versus the 144.64 MMT produced last year, a 7.4% increase and more than the 153.98 MMT predicted by the USDA last week.

They also put the EU-28 corn crop at 72.79 MMT, up from the 64.6 MMT predicted in June and 15.3% more than a year ago. EU-28 OSR output was pegged at 23.8 MMT, a 15.5% rise on last year. Both those estimates would be all time highs.

Out of interest, Coceral put the UK wheat crop this year at 16.42 MMT, up 38% on a year ago. They have the UK barley crop down 3% at 6.85 MMT and our OSR production at 2.42 MMT, a 13% rise versus 2013.

Elsewhere they see the French wheat crop rising from 36.87 MMT in 2013 to 37.6 MMT and the German crop up from 24.87 MMT to 27.87 MMT.

The Czech Stats Office estimated the 2014 grain crop there at 7.95 MMT, up 17% from a year ago. Wheat production was forecast at 5.4 MMT, a 15% rise compared to 2013.

The HGCA said that UK wheat opening stocks for 2014/15 were "historically high" at almost 2 MMT. That was despite last year's poor production, due to high imports.

They peg the 2014/15 wheat exportable surplus at 3.344 MMT, a more than 3.5 times rise on a year ago. Where that will go up is anybody's guess, at the moment a large proportion of it looks like getting carried into next season already.

France said that they had exported only 1.8 MMT of wheat to non-EU destinations in Q1 of 2014/15, a 25% decline on a year ago. FranceAgriMer have them down to export 8.0 MMT in 2104/15, which puts them behind hitting that target - and that aim is already a 35% fall compared to last season.