EU Grains Mixed As Trade Develops Holiday Feel

11/12/14 -- EU grains were mixed, with Jan 15 London wheat ending down GBP0.95/tonne to GBP126.65/tonne, Jan 15 Paris wheat was unchanged at EUR184.25/tonne, Jan 15 Paris corn was EUR0.50/tonne easier at EUR155.00/tonne, whilst Feb 15 Paris rapeseed ended EUR3.00/tonne higher at EUR342.50/tonne.

Now that the December USDA WASDE report is out of the way, the trade has developed a distinct "holiday" feel.

Egypt's GASC bought three cargoes of wheat for Jan 11-30 shipment in a tender. Two consignments were Russian origin and the other French wheat. With freight included all were priced around the $262.50-263/tonne mark.

It was interesting to see Russian wheat feature again. One theory doing the rounds as to why this should suddenly be the case is that traders are looking to "clear the decks" ahead of any possible export ban in the new year. Another is that Russian growers are emerging as sellers again, despite rouble weakness, in order to generate some cash to pay the bills.

The Russian rouble fell to new lows against both the US dollar and euro today.

Meanwhile Morgan Stanley forecast that the pound could fall to 1.45 against the dollar in 2015. Uncertainty over next year's general election and further fiscal consolidation were the reasons given.

With the three leading UK political parties in various states of disarray, a potentially strong showing from UKIP in the polls isn't difficult to imagine, which would certainly put sterling under pressure. That potentially could be helpful to UK wheat exports in the second half of the season, and boy do we need some help.

The UK finally exported more wheat than it imported in October, for the first time since May 2012.

"The big UK wheat crop of 2014 requires a return to the export market. However, low protein levels in the domestic crop means that imports of high quality milling wheat are likely to remain a factor," said the HGCA.

"The upshot is that the UK export pace not only needs to mitigate the size of the 2014 crop but also imports, if stock accumulation and possible price issues are to be avoided at the end of the season," they added.

UK growers are certainly currently carrying a lot of inventory, judged on comments made at recent farmer meetings I have attended. It will be interesting to see how long they can continue/are willing to sit on that stock when we get into the new year.

Barns three quarters full of unsold grain don't help to pay the bills. Neither do they leave much room for the 2015 harvest once that draws nearer.