EU Grains Mostly Higher At The End Of A Choppy Week
05/12/14 -- EU grains finished the day mostly higher. Although London wheat officially closed lower on the thinly traded Jan 15 and Mar 15 (only 5 lots of each traded today), the more active May 15 ended a pound higher.
At the close Jan 15 London wheat was down GBP1.00/tonne to GBP129.00/tonne; Jan 15 Paris wheat was EUR1.75/tonne firmer at EUR188.00/tonne; Jan 15 Paris corn rose EUR1.25/tonne to EUR155.75/tonne; Feb 15 Paris rapeseed ended EUR3.50/tonne higher at EUR340.25/tonne.
At the end of a choppy week that puts Jan 15 London wheat down GBP2.80/tonne, although Jan 15 Paris wheat finished the week EUR3.75/tonne higher. Jan 15 Paris corn was up EUR3.50/tonne compared to last Friday and Feb 15 Paris rapeseed ended the week EUR3.25/tonne higher than it began it.
It's been a topsy turvy week, and one that saw nearby London wheat trade as high as GBP137.75/tonne on Tuesday (the highest for a front month since the last day of June), on speculation that Russia might be about to introduce some form of export restrictions on grains.
That idea got blown out of the water on Wednesday/Thursday, although news that at least one vessel loading wheat for Egypt has now been waiting more than 2 weeks to obtain the necessary certification from the Veterinary and Phytosanitary Surveillance Service (VPSS) to allow it to sail, is of interest.
It was comments by them that new and stricter phytosanitary regulations could lead to a significant fall in grain exports in the year ahead that got the market all excited in the first place. Some still think that this could be a partial export embargo in all but name.
Europe's soft wheat export pace shows no sign of waning meanwhile, with Brussels issuing 729 TMT worth of export licences this past week. That takes the cumulative season to date total to 13.6 MMT, which is 1.1 MMT more than last year. You will need no reminding that last year was a record for EU wheat exports, and that most still forecast these to decline in 2014/15, with a subsequent rise in ending stocks.
The pace of EU wheat exports may well increase in the second half of the current season, just as it did in 2013/14, with reduced competition from the Black Sea countries.
Ukraine's wheat exports are already in decline, as the country now majors on corn. They've exported 15.66 MMT of grains so far this year, including 7.48 MMT of wheat, 3.37 MMT of barley and 4.62 MMT of corn. However, with corn being a later harvested crop, exports of that have only started to pick up in recent weeks. Corn accounted for 85% of all grain shipments via Ukraine seaports last week.
The state of winter crops in Russia and Ukraine remains a legitimate concern for the market too, and one that is unlikely to be able to be accurately assessed until the winter is over.
The Deputy Minister for Agriculture in Rostov, Russia's largest winter planted grain region, says that around 60% of crops in the region are in good to satisfactory condition. The rest is either rated poor (15%), or hasn't even germinated at all (almost 25%).
Lack of access to credit, rising inflation and acute local currency weakness is also an issue that growers in both Russia and Ukraine need to address when spring comes around.
Meanwhile, FranceAgriMer said that the French corn harvest is now complete, versus only 83% done this time last year. The French winter wheat crop for the 2015 harvest is 99% sown versus 94% a year ago. Crop conditions in winter wheat are rated 93% good to very good, unchanged from a week ago and up from 80% this time last year. Winter barley is also rated 93% good to very good, which is similarly unaltered from last week and up compared to 81% in late 2013.
Informa forecast the EU-28 all wheat crop to decline 8% to 143 MMT next year, down 12.4 MMT versus 2014. They currently have Russia's 2015 wheat crop also down 8% at 55 MMT, and see Ukraine's falling 12.5% to 21 MMT.
