EU Grains Fall As Crude Collapses

04/11/14 -- EU grains traded in the red for almost the entire session, under pressure from falling commodity prices in general. NYMEX crude slumped to a 3-year low below $77/barrel on news that Saudi Arabia was slashing its price on supplies to the US in an attempt to regain some demand from shale oil. Brent meanwhile fell the best part of 3% to around $82.50/barrel.

At the close Nov 14 London wheat was down GBP0.40/tonne to GBP118.60/tonne, Nov 14 Paris wheat was EUR3.00/tonne lower at EUR169.00/tonne, Nov 14 Paris corn was down EUR1.75/tonne to EUR140.00/tonne, whilst Feb 15  Paris rapeseed fell EUR5.00/tonne to EUR336.00/tonne.

Nov 14 fell the most of any of the Paris wheat contracts as the remaining longs exit their positions ahead of contract expiry next Monday. Open interest in that has fallen dramatically in the past couple of weeks, but is still the equivalent of over 300 TMT, so some erratic behaviour may still be seen between now and next week.

The USDA surprised the market a little last night by reporting that US farmers had gathered 19% of their corn crop in a week. Harvesting has apparently only seen a larger percentage weekly advancement than that twice since 1995, according to Agrimoney.

This is now putting US elevators and on farm storage capacity under pressure with 65% of this year's record corn harvest now done. The USDA are expected to further increase their production forecasts for both corn and soybeans next week.

The pound was little changed against the euro today, hovering just below the 1.28 mark, with many analysts now predicting it to hit 1.30 in the coming weeks. All eyes are now on the ECB when they meet later in the week. They left rates on hold last month, but in September they unexpectedly cutting their refi (borrowing) rate from 0.15% to 0.05%, along with reducing the deposit rate from the previous minus 0.1% to a new minus 0.2%.

The market isn't ruling out another surprise on Thursday, with the eurozone economy stagnating and unemployment running at 11.5%, almost double that of the UK.

Strategie Grains raised their forecast for the EU-28 rapeseed crop again yesterday, up from 23.8 MMT to a new record 24 MMT, a near 5% increase on last year. They left their forecast for plantings for the 2015 crop unchanged at 6.5 million hectares, a 3% decline year-on-year.

Ukraine said that they'd harvested 56.4 MMT of grains so far this year, off 92% of the planned area (excluding Crimea). The ongoing corn harvest is 77% done producing a crop of just shy of 20 MMT to date. Ukraine has also harvested 9.4 MMT of sunflower (off 98% of plan) and a record 3.5 MMT of soybeans (off 94% of plan).

Ukraine winter grains have been planted on an area of 7.15 million hectares, or 96% of expectations. Winter wheat is 98% planted on 6.1 million ha, with winter barley sown on 885k ha, or 83% of the government forecast. Ukraine winter rapeseed planting is complete on 860k ha, a 9% drop compared to last year.

"Winter plantings have gone into good soil conditions, no one applies (much) fertiliser or chemicals in the autumn anyway, so lack of credit is unlikely to have had much impact at this stage," one contact in Ukraine tells me.

Winter grain plantings are just about done in Russia, although things don't look quite so rosy over there.

Kazakhstan meanwhile has completed the harvest on 13.6 million ha (90.5%) of it's 2014 cropped area, producing 16.9 MMT of grains to date.