EU Grains Fall, Despite Euro Weakness, Record French Wheat Crop Looming?

Posted by Nogger - a legend in his own mind at 14:02 | Categorized as

07/04/15 -- EU grains returned from the Easter break to trade mostly lower.

At the finish, May 15 London wheat was down GBP1.10/tonne at GBP121.85/tonne; May 15 Paris wheat was EUR2.25/tonne lower at EUR191.50/tonne; Jun 15 Paris corn was up  at EUR163.75/tonne at EUR165.25/tonne; May 15 Paris rapeseed was unchanged at EUR363.75/tonne.

Uncertainty surrounds the future of Greece within the eurozone. Despite their assurances that this week's EUR450 million repayment to the IMF will be honoured, larger debts loom large on the near horizon.

The euro was down sharply against both the pound and US dollar today, as the market fluctuates, seemingly undecided whether a "Grexit" would be bullish or bearish for the single currency.

The euro fell below 1.09 versus the US dollar, and if support around the 1.05 level breaks then parity could be on the cards, according to some pundits.

If that happens then it would surely add further support to the wheat market on the continent, which already sees exports running ahead of last year's record pace.

Saudi Arabia bought 780 TMT of 12.5% hard milling wheat for Jun/Aug shipment over the weekend. The accepted origins were said to be the EU, North America, South America and Australia. Europe are probably the favourites to supply the majority of the volume. The prices paid were reported to be around USD230-240/tonne including freight.

The French Ag Ministry reported spring barley plantings there are likely to fall 11.8% versus a year ago to 464k ha. That's partly due to an increase in winter barley and wheat plantings. The all barley area is only seen 0.7% lower at 1.758 million ha. The winter and spring soft wheat area is expected to be 3.4% higher at 5.179 million ha - the highest in more than two decades.

That data looks ominous for a potentially record large French wheat crop in 2015, when combined with FranceAgriMer's crop ratings figures from last week, where a large 91% of the winter wheat crop said to be in good to very good condition versus 76% this time a year ago.

Russia said that they'd exported 26.335 MMT of grains so far this year, an increase of 26.3% compared with this time last year. Of that, 19.465 MMT was wheat (74%), 4.482 MMT barley (17%) and 1.963 MMT corn (10%), they said.

The Russian Ag Ministry said that spring plantings had been completed on 1.5 million ha, around 3.2% of plan. Only 49% of winter grains had thus far had any fertiliser applied to them, they added.

Rosstat said that Russian consumer price inflation rose from 15.7% in February to 16.9% last month, with food prices up 23% year-on-year.

Things are even worse in Ukraine where inflation is now running at 45.8%, and food prices are up 53.4% versus a year ago.

Ukraine fertiliser manufacturers are reporting a sharp drop in spring sales as farmers look to cut costs any way they can.

Ukraine said they they'd so far exported 332 TMT of the 850 TMT of preferential duty-free wheat quota issued to it by the EU.

The Indian Ag Ministry estimated wheat losses due to late season heavy rain and hail at around 4-5%, which would be something in the region of 4 MMT. There could also be some quality issues, leading to extra imports of higher grade wheat to blend with inferior domestic supplies.