Paris Grains Rise On Acute Euro Weakness. IKAR Slash Russia's 2015 Production Potential

23/01/15 -- EU grains closed mixed, with the Paris markets mostly higher on acute euro weakness, and London wheat falling in an attempt to make our exports more competitive with those on the continent.

At the close, Jan 15 London wheat was went off the board GBP0.45/tonne lower at GBP126.30/tonne, Mar 15 Paris wheat was EUR0.50/tonne higher at EUR198.50/tonne, Mar 15 Paris corn was EUR1.00/tonne firmer at EUR159.25/tonne and Feb 15 Paris rapeseed was u EUR1.25/tonne at EUR356.50/tonne.

For the week overall there was very little movement, London wheat was unchanged, whilst the Paris market rose one euro. Corn was down a quarter and rapeseed fell half a euro. The market is still largely ignoring what is going on in Russia and Ukraine, both militarily and crop-wise.

The big story of the week that has grabbed everyone's attention has to be the ECB move to pump more than EUR1 trillion into the eurozone economy which sent the euro tumbling to an 11 year low against the US dollar and a new 7 year low versus the pound. The latter meanwhile fell below 1.50 against the US currency today, a level not seen since July 2013.

Despite previous denials, the Russian Deputy PM has apparently now admitted that the recent tough stance on phytosanitary rules was a deliberate attempt to limit grain exports in January, before the new export duty comes in on Feb 1. These rules will be relaxed after that date for the purposes of "transparency in the market" he said! That's Russian politics for you.

He said that Russia will export around 28 MMT of grains this season, which is some 6 MMT more than they have currently shipped, according to his figures. The last numbers released from the Russian Ag Ministry said that the country had exported 21.571 MMT of grains to Jan 15.

The USDA currently have Russia down to export 27.3 MMT of wheat, corn and barley in 2014/15.

Europe will be the most likely beneficiary of any shortfall in Russian exports, particularly given the recent demise of the euro.

Brussels said that they'd issued 728 TMT of soft wheat export licences this past week, up 32% on the previous week. That takes the marketing year to date total so far to just over 16 MMT, which is 4% less than last year's record pace. Europe has also exported 531 TMT of durum wheat so far this season, putting all wheat exports at almost 16.6 MMT, which is 55% of the USDA's 30 MMT target for the season.

Brussels also granted 286 TMT worth of barley export licences, taking the season so far total to 4.77 MMT, which is in line with a year ago. Cumulative corn import licences are down 23% versus last year at 5.14 MMT.

Ukraine's Food Minister denied that the country has any plans to limit grain exports, despite it being widely reported recently that a cap on milling wheat sales had recently been agreed with the country's exporters. Ukraine politics clearly isn't much different to that in Russia.

Looking ahead to 2015 production prospects, Russia's Institute for Agricultural Market Studies (IKAR) were said to have estimated the country's grain production potential this year at only 86 MMT, a sharp 17.3% fall on output this season. Wheat will account for 50 MMT of that total, a 15.3% fall compared to this season, they said.