Nogger's Blog

17/12/14 -- EU grains closed mixed, but with wheat marching on to fresh highs for the move on the developing Russian situation. Paris wheat came within a whisker of EUR200/tonne, we haven't seen a front month close at that level since May.

At the finish Jan 15 London wheat was up GBP1.90/tonne at GBP135.90/tonne, Jan 15 Paris wheat jumped EUR3.75/tonne to EUR198.50/tonne, Jan 15 Paris corn was EUR2.75/tonne lower at EUR155.75/tonne, whilst Feb 15 Paris rapeseed was up EUR0.75/tonne to EUR344.75/tonne.

SovEcon said that there are "huge issues" with grain export licences in Russia at the moment, apparently confirming recent rumours.

There's more than one way to skin a cat, who needs to upset the WTO with an export ban when the same effect can ultimately be achieved via red tape?

Having loaded vessels sat around waiting for the appropriate paperwork for days/weeks on end before they can sail is a very expensive exercise indeed, and one that exporters won't want to be picking up the tab for.

Most buyers will be keen to avoid this sort of disruption too, and will soon turn to other origins that are able to ship on time.

The HGCA  meanwhile said that the recent alarming slump in value of the rouble had "created a big incentive" for Russian farmers not to sell their wheat.

Holding onto physical grain was currently a far safer hedge than selling it, they added.

Whilst almost all of the talk surrounding Russia is currently about these nearby issues, there's winter kill losses and difficulty in funding the spring planting program and growers ability to fund the purchase of inputs also still to get over in 2015.

Whilst crude oil is going for a bath (somebody posted on Twitter today that a barrel of Evian water is now more expensive than a barrel of crude), along with some other markets, there's a school of thought that grains suddenly could offer the chance of better returns in 2015 than many other sectors. Prices are after all still pretty close to recent historic lows.

Some spec money might see this as a chance to get in, if not exactly on the bottom rung of the ladder then maybe still a fair way from the top.

In other news, the Ukraine Ministry of Economic Development said that the country had exported 15.19 MMT of grains in the Jul/Nov period. That total includes 7.32 MMT of wheat, 3.51 MMT of barley and 4.14 MMT of corn.

The USDA has them down to export 10.3 MMT of wheat this season, so that's 71% of that total gone already.

The same body forecasts Dec/Jul grain exports at an ambitious looking 21.5 MMT, which would take full season exports to a record in excess of 36.5 MMT.

The Ukraine Ag Ministry meanwhile estimate that winter grain plantings are up 8.8% to 8 million ha, despite the loss of Crimea and war in the east.

Russia's winter plantings are also well ahead of year ago levels, and the official Ag Ministry forecast there is still for record exports this season.

So, everything is apparently officially fine in both countries. Does anyone else get the whiff of a decomposing rodent here?