EU Grains End Mostly Lower On The Day, But Higher For The Month

31/10/14 -- EU grains finished the day mostly lower, and finished mixed for the week, with London wheat displaying particular weakness today.

The day ended with Nov 14 London wheat ended down GBP3.25/tonne to GBP118.50/tonne, Nov 14 Paris wheat finished EUR0.25/tonne firmer at EUR172.25/tonne, Nov 14 Paris corn was down EUR1.75/tonne at EUR143.75/tonne, whilst Nov 14 Paris rapeseed was EUR1.25/tonne higher to EUR330.50/tonne.

For the week that leaves London wheat GBP1.30/tonne lower, Paris wheat EUR6.50/tonne higher, corn EUR0.75/tonne weaker and rapeseed EUR7.50/tonne firmer. As you can see, it's clearly been a choppy old week!

For the month of October, London wheat has still put on GBP10.80/tonne, or 10%. Paris wheat has risen almost 13% during the month, with corn 4% higher and rapeseed up by almost the same percentage.

Stocks in Europe and the US rose following a surprise move by the Bank of Japan to introduce a fresh round of monetary stimulus. Falling equities in the past month or so have been one of the things wooing investors back to the grains sector, so that could be seen a a bearish development.

The continued strong pace of EU wheat exports remains a supportive factor. Brussels issued 729 TMT worth of soft wheat export licences this week, taking the cumulative campaign total to 9.8 MMT. That's higher than the 9.0 MMT granted this time a year ago when exports went on to be record high.

You will recall that most analysts have EU-28 wheat exports down to decline this year. The IGC put all wheat exports at 28.1 MMT yesterday, down from 32.8 MMT a year ago, although up on the 26.7 MMT forecast a month previously.

Note that the IGC however also raised their EU-28 wheat production and 2014/15 ending stocks estimates, with the latter now seen at 17.0 MMT, almost 2 MMT higher than a month ago and almost double the 8.8 MMT carryover at the end of last season.

The pound finished the week at close to it's highest level against the euro since the summer of 2012, which also helps explain some of the disparity between London and Paris wheat today.

The HGCA reported average specific weights in UK wheat samples this year at 77.1 kg/hl, similar to a year ago. Hagberg falling numbers are good, and also little changed versus 2013 at 308, although protein levels are lower at 11.3%, they said.

UK barley specific weights are down on last year at 66.3kg/hl, although note that spring barley varieties account for 74% of the total sample.

FranceAgriMer said that the French corn harvest had advanced to 57% done as of Monday, up from 38% complete a week previously and versus 30% this time last year.

French winter wheat planting is 77% complete, up from 55% a week ago and 10 points ahead of last year's pace. The winter barley crop is 93% planted versus 80% last week and 86% this time last year. Winter barley crop conditions are rated 94% good to very good versus 91% this time last year. They haven't yet started reporting on winter wheat conditions.

Harsh wintry weather in the remaining areas of Siberia and the Urals left to be harvested have trimmed recent analysts projections for the 2014 Russian grain harvest by 1-2 MMT to around 102-103 MMT in clean weight.

The Russian Ag Ministry say that the country has now harvested 108 MMT of grains in bunker weight off 43.3 million hectares, or 96.1% of the planned area. Almost 20% of crops in the Urals area remain unharvested.

The acute weakness of the Russian rouble is supporting domestic prices. The Russian central bank increased interest rates from 8% to 9.5% today, in an effort to combat rising inflation. Rates were only 5.5% at the turn of the year.

The Ukraine harvest meanwhile is 91% complete on 13.5 million hectares at 55.6 MMT.