EU Grains Mixed, Euro Weakness Aids Paris Market

04/03/15 -- EU grains closed mixed. Continued euro weakness added a bit of support to the Paris market.

At the finish, Mar 15 London wheat was down GBP0.45/tonne at GBP116.75/tonne; Mar 15 Paris wheat was EUR0.75/tonne lower at EUR187.50/tonne; Mar 15 Paris corn was EUR1.50/tonne easier at EUR146.25/tonne; May 15 Paris rapeseed was EUR1.00/tonne higher at EUR365.75/tonne.

The HGCA reported winter wheat plantings in England and Wales as of Dec 1 at 1.69 million hectares, a 7% decline year-on-year. Winter barley plantings were up slightly on 370k ha a year ago at 371k ha, which is the largest area since 2003, they say. Winter OSR plantings of 633k ha are 1% down compared to the area of both winter and spring OSR harvested in 2014.

The decline in wheat plantings is a little surprising, although the final area could alter allowing for crops planted after Dec 1 and possibly a small spring sown crop.

As of Dec 1, the total area planted with wheat, winter barley, oats and oilseed rape was 2.776 million ha, 5% less than the total area of these crops harvested in 2014, they estimate.

"Potential factors include increased interest in cultural controls for weeds and diseases, particularly black-grass, as well as changes to the economics for the whole rotation. The higher yields of winter crops are worth comparatively less at lower prices – increasing the incentive to plant spring crops. The introduction of the three-crop rule as part of the latest changes to the Common Agricultural Policy may also have had an impact,” the HGCA said.

Ukraine growers wondering how they are going to finance their spring planting and crop treatment campaign woke up to a nasty shock this morning. The Ukraine government hiked interest rates overnight from 19.5% to 30%.

UkrAgroConsult yesterday forecast Ukraine's 2015 OSR production to fall 23% to 1.7 MMT. Less than half the winter crop is said to be in good condition. That potentially leaves Europe looking elsewhere to cover the shortfall, as most of Ukraine's annual OSR exports usually end up here. Ukraine typically account for around 14% of all global rapeseed exports, according to the HGCA.

Ukraine's Ag Ministry said that the country had exported 24.68 MMT of grains so far this season, including 9.29 MMT of wheat, 3.87 MMT of barley and 11.27 MMT of corn.

It seems unlikely that they will manage to attain those sort of levels in 2015/16. Yields look set to be lower, and quality could be an even bigger issue given that growers are likely to be forced to reduce fertiliser and agrochemical applications.

This situation is also likely to be replicated in Russia this spring. The Russian Ministry for Economic Development said today that fertiliser prices in the country rose 9.8% in January and are up 45.2% year-on-year. Loan rates there are said to be running at around 25-30%. Russian inflation meanwhile rose by its highest monthly rate since 1999 in January.