EU Grains End With Yearly Losses, But Maybe Not As Bad As You Might Think

31/12/14 -- EU grains finished a predictably quiet, low volume, day mixed. At the finish Jan 15 London wheat was down GBP0.55/tonne at GBP133.30/tonne, Jan 15 Paris wheat was EUR0.25/tonne easier at EUR200.00/tonne, Jan 15 Paris corn was up EUR4.75/tonne at EUR162.50/tonne and Feb 15 Paris rapeseed ended EUR3.75/tonne lower at EUR351.00/tonne.

For the year, that puts London wheat a little over GBP30/tonne lower than where it was twelve months ago, for a year-on-year decline of 18.6%. Paris wheat has fared considerably better, losing only EUR9/tonne over the course of 2014, for a net loss of only 4.3%.

Paris corn ends 2014 with an EUR9.25/tonne loss, or 5.4%. Paris rapeseed meanwhile is down EUR15.50, or 4.2%, during the course of 2014.

I suspect that these relatively modest yearly falls for the Paris grains surprise you, as they did me.

Part of the reason behind that is of course euro weakness, rather than sterling strength, with the pound having risen steadily against the single currency throughout almost the whole of 2014.

Sterling ends the year with a net gain of around 7% versus the euro. Conversely it's fallen around 5.5% compared to the US dollar versus the end of 2013, although that really only tells half the story. The pound has actually shed more than 9% of it's value against the greenback compared to the summer highs of close to 1.72 versus the US dollar.

The big stories of the year have really all been about record global wheat, corn, soybean and rapeseed crops in 2014/15, which drove down prices to 4-year lows at harvest time. These records were actually back-to-back records, as production of all four of these grains/oilseeds followed previous all time highs in 2013/14.

If you're an arable farmer, things might not look too great right now, but they're a whole lot better than they were just a few months ago. You can also console yourself with the thought that at least you're not an oil baron!

For the record, London wheat actually ends the year almost 24% above the post harvest closing low of GBP107.65/tonne set in late September. In Paris, wheat is up 33%, corn up 24% and rapeseed is 14% higher than the closing lows of the year.

NYMEX crude incidentally is down 46% compared to last New Year's Eve, and ends the year more than 50% off the summer highs.

Perhaps the other big story of 2014 concerns Russia, firstly "acquiring" Crimea, then setting off the subsequent chain of events (combined with the slump in global crude oil values) that has seen the rouble fall off a cliff and the subsequent recent introduction of an export duty on wheat.

What will 2015 bring? More volatility looks like being the only thing that can be predicted with any degree of confidence. Will production levels in 2015 set records for the third year in a row? You'd probably have to think that some crop calamity is overdue, but only time will tell....