Nothing Goes Down Forever!
29/10/14 -- EU grains staged another day of decent gains. "Some of the (recent) support has come from a later than usual US maize harvest and drier than normal conditions in key wheat growing areas of Australia," said the HGCA.
At the close Nov 14 London wheat was up GBP0.70/tonne at GBP122.10/tonne, Nov 14 Paris wheat finished EUR4.00/tonne higher at EUR173.50/tonne, Nov 14 corn was EUR1.25/tonne firmer at EUR145.00/tonne and Nov 14 rapeseed ended up EUR6.50/tonne to EUR334.50/tonne.
Open interest in front month Nov 14 London wheat was down to 172 lots as of last night's close, following heavy deliveries against the contract in the past couple of days.
The HGCA also noted dryness in South America delaying summer plantings there, and suggested that "these are the first bullish sentiments in some time after an almost continuous flow of bearish news over the past six months or so."
They didn't (in that article) mention worries about poor emergence of Russian winter grain plantings. Agrimoney quoted one Black Sea farm operator as saying that "20% of (it's Russian) winter seeded area has emerged in a poor state and is not well prepared to face the winter."
Meanwhile the 2014 Russian harvest soldiers on, hampered by heavy snowfall in some areas of the Urals and Siberia. The former is only 77% harvested on 2.6 million hectares, versus 3.1 million this time last year.
Kazakhstan is also struggling to get the last of it's 2014 harvest in, with 12.5% of the crop still out in the fields as of Oct 27, as winter closes in. In the north of the country, the first snow fell in mid-October and prior to that it rained almost continuously, reducing the quality of this year's wheat crop. They are now said to be buying in better quality Russian wheat to blend in with their own domestic harvest.
Ukraine said that they'd exported 11.24 MMT of grains so far this year, up 25% from a year ago. Wheat accounts for 56% (6.27 MMT) of that total, with barley responsible for 29% (3.21 MMT) and corn an additional 14% (1.62 MMT). They are expected to soon start to major on corn exports, with harvesting of that crop around 75% complete. UkrAgroConsult said that Ukraine exported a record 19.87 MMT of corn in 2013/14, a 58% increase versus the previous marketing year.
Jordan cancelled a tender for 100 TMT of optional origin hard milling wheat due to lack of offers, and immediately re-issued another one.
Given recent price action I wouldn't be surprised to see Egypt's GASC back in the market again in the next few days.
Meanwhile it looks like speculative money is coming back in, and fund activity in the grains sector is increasing. Yesterday saw a record volume trade in Chicago soybeans and meal. Dec 14 soymeal in Chicago is up 28% since the first of the month, it is still however 25% below the highs of 2014, it is also 29% under the 2013 high and 30% beneath the highs of 2012. Incidentally all three of those annual highs were set in the summer months, this year it was June, last year it was July and in 2012 it was set in August.
Buying your summer soymeal requirements on the spot market has proved to be a very expensive mistake therefore in each of the last three years. Currently soymeal in the UK for next summer is around GBP60/tonne cheaper than spot material. I'll leave that thought with you....
