Nogger's Blog

12/12/14 -- EU grains closed mostly higher on the day, but with relatively small gains for the week. Renewed rumours concerning the introduction of some form of Russian export restrictions, if not an outright ban itself, were supportive today.

At the finish Jan 15 London wheat was up GBP3.55/tonne at GBP130.20/tonne, Jan 15 Paris wheat jumped EUR4.50/tonne to EUR188.75/tonne, Jan 15 Paris corn was EUR2.25/tonne firmer at EUR157.25/tonne, whilst Feb 15 Paris rapeseed was up EUR0.25/tonne to EUR342.75/tonne.

For the week, that puts London wheat up GBP1.20/tonne, with Paris wheat EUR0.75/tonne firmer, corn up EUR1.50/tonne and rapeseed EUR2.50/tonne higher.

Russia's Agriculture Minister Nikolai Fedorov described the fact that the country had exported almost a third more grain so far this season than in 2013/14 as "a disturbing trend". He said that the Ministry will consider all options (except an embargo) to contain grain exports.

One option being touted is to increase the price that the government pay to purchase grain for their intervention program. Despite two bumper harvests in a row, the government hasn't been very successful in buying grain for that on the domestic market, the demise of the rouble means that better returns are available elsewhere.

Whether the government will set the intervention price high enough is debatable, so too is where are they going to find the money to pay for it. The rouble hit new lows against the US dollar and euro again today, forcing the Bank of Russia to intervene in the market (again) to try and halt the demise of the currency.

Now we have reports of the Russian State Duma drawing up a draft law that would require exporters to sell the Central Bank half of their foreign currency reserves. It isn't hard to imagine the uproar that would cause, and I think we can all guess in who's favour the exchange rate(s) would be set.

The Interfax news agency quoted Nikolai Pankov, chairman of the State Duma agrarian affairs committee, as saying that "it was necessary to more actively use the legal framework that exists for regulating prices on socially significant food items."

All interesting stuff, and a storyline that is far from over yet.

Meanwhile Reuters are carrying a report today that suggests that Ukraine exporters may default on something like 20% of around 1.1 MMT of corn sold to China, as they are unlikely to be able to ship all they have sold to the Far Eastern buyer under a special quota system that expires in February.

In other news, Brussels said that they'd issued 344 TMT of EU soft wheat export licences this past week, taking the cumulative season to date total to 13.1 MMT, which is around 5% ahead of this time a year ago.

FranceAgriMer said that the French winter wheat crop is 99% sown as of Monday, and that the 2014 corn harvest is now officially complete. Arvalis said that the French corn crop this year could reach a record 18 MMT.

FranceAgriMer said that French winter wheat crop conditions were 93% good to very good, unchanged on a week ago (although there was a 2 point shift from the former to the latter) and 13 points ahead of this time last year. Winter barley conditions are also 93% good to very good, similar to last week and up versus 81% a year ago.