EU Grains Begin 2015 In The Red

02/01/15 -- EU grains began the new year pretty much as they ended the old year, in the red. Fresh news remains light in another holiday shortened week.

The day ended with Jan 15 London wheat down GBP1.70/tonne to GBP131.70/tonne, Jan 15 Paris wheat was EUR2.00/tonne lower at EUR198.00/tonne, Jan 15 Paris corn was EUR5.75/tonne easier at EUR156.75/tonne, whilst Feb 15 Paris rapeseed ended EUR3.25/tonne weaker at EUR347.75/tonne.

For the week that puts London wheat down GBP3.65/tonne, in Paris wheat fell EUR3.00/tonne, corn was down EUR4.75/tonne and rapeseed slumped EUR5.75/tonne.

Comments from from Mario Draghi, the president of the European Central Bank, in an interview with the German newspaper Handelsblatt hinting at further QE in the eurozone in 2015 look like keeping the euro under pressure in the coming months. Meanwhile uncertainty in the UK, with a general election now only 4 months away, and David Cameron already on the campaign trail might not do the pound too much good either.

Both currencies were down against the US dollar today, with sterling putting in its lowest close against the US currency since August 2013. The euro meanwhile posted its lowest against the resurgent greenback since mid-2010. Uncertainty over the outcome of the Greek election, now little more than 3 weeks away, will add to euro pressure.

The prospect of weakness of both currencies in the months ahead may add some support to EU grains, relative to those across the Pond at least, in Q1 of 2015.

That should help keep demand for EU wheat buoyant, although the pace of exports relative to a year ago has slackened off in recent weeks.

Certainly the new Russian export duty won't do any harm to help that cause. UkrAgroConsult cut their forecast for Russian wheat exports in 2014/15 to 20 MMT from 22.3 MMT today, although still higher than 18.3 MMT in 2013/14. They also trimmed 1 MMT off their Russian barley export estimate to 3.3 MMT, and cut corn exports from 3.8 MMT to 3.0 MMT.

The Ukraine Ministry meanwhile reported that, as of Dec 25, 41% of their winter crops are in good condition, down from 57% a year ago. The proportion rated in poor condition is 18% versus 8% a year ago.

How winter grains emerge from dormancy in the spring in both those key exporting countries, and the effect that the acute weakness of both domestic currencies and the lack of available credit will have on spring input purchases will also be an important factor in determining which way grain prices go in 2015.