EU Wheat Rises On Strong Exports, Russian Weather Woes
21/11/14 -- EU grains traded higher on the day, and higher for the week. Nov 14 London wheat expired, making Jan 15 the new front month.
At the close Jan 15 London wheat was up GBP2.25/tonne to GBP128.00/tonne, Jan 15 Paris wheat was EUR3.00/tonne firmer at EUR177.75/tonne, Jan 15 Paris corn was up EUR0.50/tonne to EUR152.25/tonne, whilst Feb 15 Paris rapeseed ended EUR1.25/tonne higher at EUR339.00/tonne.
For the week, Jan 15 London wheat gained GBP1.35/tonne, with Paris wheat adding EUR1.25/tonne, corn falling EUR0.75/tonne and rapeseed EUR3.25/tonne firmer.
London wheat is now at the best levels for a front month since mid-July, and Paris wheat is at its highest since early August.
Comments by ECB chief Mario Draghi were interpreted by the market as meaning that the bank is willing to further increase QE, which put the euro back under pressure today. The single currency slumped to its lowest levels against a resurgent dollar since Aug 2012, and is now down almost 10% against the US currency since the turn of the year.
EU wheat exports already remain very strong, and a weak euro will only help maintain that pace. Brussels issued a further 636,000 MT of soft wheat export licences this past week, taking the marketing year to date total to 11.5 MMT, which is almost a million tonnes ahead of this time a year ago when the final total went on to break all previous records.
FranceAgriMer said that the French corn harvest was 95% complete as of Monday, up 5 points on a week previously and 30 points ahead of this time a year ago.
Crop conditions for 2015 look promising at this early stage.
French winter wheat is now 98% planted versus 96% a week ago and 87% in 2013. The crop is 91% emerged versus 84% last week and 79% a year ago. They said that 38% of the crop is at the early tillering stage, up from 25% last week and ahead of only 24% a year ago.
The French winter barley crop has been 100% sown for a few weeks now. The proportion at the early tillering stage was estimated at 61%, up from 45% both a week and a year ago.
Winter wheat ratings dropped one percentage point from a week ago in the good to very good category to 93%, although that's not bad at all and still 10 points ahead of this time last year. Winter barley rated good to very good also fell a point on the week, and also to 93%, a year ago 81% of the crop was estimated to be in the top two categories.
If things look good in France, they're far from it in Russia where dryness remains a serious issue for their winter planted crops. "In the past 30 days only 13 mm of rainfall has developed in Krasnodar, Stavropol, Rostov and Volgograd, the 4 main winter wheat districts. That amounts to 37% of normal moisture. Dry weather this autumn also comes on the heels of a very dry summer. Less than half of normal rainfall occurred during June-August in the Southern District," say Martell Crop Projections.
SovEcon recently likened conditions this year to late 2009, Martell Crop Projections say that this year's drought is even worse. Wheat production in 2010 went on to be very poor, although a spring and early summer drought and heatwave were also contributory factors in that particular growing year. World wheat prices doubled in the second half of 2010 through to early 2011 on the back of this you may recall.
Soaking spring rains will now be needed to save Russia's winter planted crops (mainly wheat) from becoming a similar disaster. This time round Russian growers also have the thorny problem of lack of easy access to credit to fund spring plantings and purchase other inputs. This could be as big, if not an even bigger issue than current crop conditions, one local commentator tells me.
The Russian Central Bank recently raised interest rates to 9.5% amidst a plunging rouble and raging inflation caused by Western sanctions. If you are a Russian farmer wanting to get a loan then your local bank is charging at least double that, and as much as 22%, if you can get one at all I understand.
