EU Grains Mixed, Pound Hits New Highs Versus Weak Euro

26/02/15 -- EU grains closed mixed. The same old story of a perpetually weak euro offered more support to Paris wheat than it did to the London market. The pound closed at its best levels versus the single currency since late 2007.

At the close, Mar 15 London wheat was GBP0.35/tonne easier at GBP116.15/tonne, Mar 15 Paris wheat was EUR1.00/tonne higher at EUR185.50/tonne, Mar 15 Paris corn was down EUR0.25/tonne at EUR148.50/tonne and May 15 Paris rapeseed rose EUR3.00/tonne to EUR362.50/tonne.

"The bearish sentiment in grain and oilseed markets has put pressure on prices, and currency movements have exacerbated issues for UK prices," noted the HGCA.

The International Grains Council increased their forecast for global cereal production by 4 MMT to a record 2,006 MMT, up 5 MMT on a year ago.

However, "all of the revision is absorbed by higher projected consumption, mainly in the feed and industrial use sectors, as demand is being stimulated by lower prices," they said.

World wheat production in 2014/15 was increased 2 MMT to 719 MMT, with consumption up 1 MMT at 709 MMT and ending stocks rising 1 MMT to a comfortable 197 MMT.

"World wheat markets were pressured by ample availabilities, strong competition among exporters and generally favourable prospects for 2015/16 winter crops," they added.

World wheat production in the year ahead will however fall to 705 MMT, they predict.

Unfortunately, the wheat tonnages given on their website are incorrect, and relate to "all grain" volumes not specifically wheat, so I can't report on these individually.

Closer to home: "Winter temperatures have been sufficiently mild in Western Europe to encourage slow growth in wheat. The late February satellite image reveals strong vegetation (health) in Spain and western France with warm winter temperatures. Less robust growth is revealed in United Kingdom, Denmark, Germany and Poland, where temperatures were cooler," said Martell Crop Projections.

"The forecast is extremely wet in Western Europe in the upcoming week. France and Germany are expecting 2-3 times the normal weekly rainfall with 1.5-2 inches expected. Rainfall would lighten up in southern Europe, the countries bordering the Mediterranean Sea expecting welcome dryness and more sunshine," they add.