EU Grains Mixed To Start The Week

03/11/14 -- EU grains were mixed to start the week, with euro weakness adding a bit of support to Paris grains.

At the close Nov 14 London wheat was up GBP0.50/tonne at GBP119.00/tonne, Nov 14 Paris wheat finished EUR0.25/tonne lower at EUR172.00/tonne, Nov 14 corn was EUR2.00/tonne easier at EUR141.75/tonne and Feb 15 rapeseed ended down EUR3.25/tonne to EUR341.00/tonne.

Egypt's GASC bought one cargo (60,000 MT) of French wheat over the weekend at $260/tonne including freight. The winning FOB price was $244.44/tone, which was far cheaper than the lowest Russian offer of $257.95/tonne.

They've now bought just under 2 MMT of wheat so far this marketing year, of which 600 TMT is French, 660 TMT Romanian and 585 TMT Russian origin. They've also bought one cargo each (55 TMT) of US and Ukraine material.

The fact that they are now actively buying French wheat is supportive to that market, as too is the notion that the cheap offers out of Russia and Romania that we saw earlier in the season appear to be drying up.

You may however have noted that Egypt are really only "chipping away" at the market in these recent tenders, booking only 1, 2 or maybe 3 cargoes at a time - no serious volume. They say that they expect their 2014/15 total foreign wheat purchases to total around 4.0-4.5 MMT this season, down from 5.46 MMT in 2013/14.

Ukraine appear to be finding other markets for their wheat, given the inferior nature of their crop this year. They are also now starting to major on corn.

Ukraine seaports shipped 616.5 TMT of grains last week, including 280.1 TMT of wheat and 327 TMT of corn. That's down a little from the 673 TMT shipped out a week ago, but still a respectable total. They shipped no barley at all last week, meaning that in percentage terms shipments of both wheat and corn increased week-on-week, with wheat up to 45% of the weekly total from 32% the previous week, and corn at 53% from 12%.

Macquaire forecast a 10.5 MMT drop in Russian/Ukraine wheat production in 2015, with the former's crop falling 7.5 MMT to 54 MMT and the latter's down 3 MMT to 22 MMT. The Russian estimate is actually quite a bit higher than the "under 50 MMT" suggested by SovEcon last week, and also IKAR's "preliminary and pessimistic" 46.5 MMT, so whether that's bullish or bearish I will leave you to decide.

The pound rose close to it's best levels against the euro since July 2012 following the release of much better than expected manufacturing data.

There could be further sterling appreciation ahead this week, with both central banks meeting. Few expect anything different from the Bank of England, but the ECB has thrown in a few surprises in recent months as it seeks to stimulate growth in the eurozone. We shall see.

French corn harvesting is probably around 70-75% done by now, although we won't have the official estimate Friday. Agritel report that yields are "excellent in most areas" and on target to produce a record crop of around 17.5 MMT, which would be half a million more than the USDA's October estimate.

French corn prices are currently around EUR146-146 FOB ports on the west coast, the equivalent of around GBP112-114/tonne.

Israeli buyers are tendering for 235 TMT of corn, 25 TMT of feed wheat and 20 TMT of sorghum, all of optional origin. Black Sea suppliers are likely to be the favourites to win that business.