EU Grains Rise AOn Ideas Exports Remain Strong
01/04/15 -- EU grains closed mostly higher with May 15 London wheat up GBP1.50/tonne at GBP122.00/tonne, May 15 Paris wheat up EUR3.25/tonne to EUR190.75/tonne, Jun 15 Paris corn up EUR0.50/tonne at EUR164.25/tonne and May 15 Paris rapeseed up EUR1.25/tonne at EUR368.25/tonne.
Fresh news was relatively light following yesterday's USDA releases. These early acreage numbers are of course far from yet being written in tablets of stone, and much can change between now and the finish of the planting season.
Indeed, a flick back through the record books shows that the January "final" acreage estimate has differed from the Mar 31 forecast by as much as almost 2 million acres on the high side to more than 3 million on the low side in the case of corn in the previous 10 seasons.
The final area on soybeans has also proved to be 2-3 million acres wrong three times in the last 10 years. As you might expect the USDA has the best track record on wheat acreage, as most of that crop has already been in the ground for some considerable time when the Mar 31 estimates are released, even so the final planted area has been 2-3 million over-estimated in 2 of the previous 4 seasons.
So ultimately, we are not really much wiser today than we were yesterday morning. The US wheat market appears torn between the fact that fund money is short, and appears more inclined to buy on the dips rather than look to actively extend that position too much. There are also well reported question marks over the state of US winter wheat on the Plains. On the flip side we have the perennially strong US dollar continuing to harm US wheat export prospects.
Closer to home, EU wheat exports remain very robust, and look currently set to beat even last season's record pace - we are currently ahead of it by 7.5% - with another set of export licence figures due tomorrow. Export licenses have been granted for more than 3 MMT of soft wheat in the past 3 weeks.
EU barley exports are also going well, with ODA saying that France could leapfrog Australia into top spot in the world export table this season. They'd exported more than 3 MMT of the grain in the first half of 2014/15, and are set to ship more than 2 MMT to China alone this season, which is more than a third of all their total import requirements which are placed at a record 6 MMT in 2014/15 as they buy large volumes of coarse grains to compensate for their lack of corn purchases from the US over GMO issues.
China will occupy second top slot in the world barley import league in 2014/15, only 0.5 MMT behind Saudi Arabia, according to the latest USDA estimates.
Russia's intervention purchases are picking up due to the excessive export duty on wheat. This means that local prices are declining, enabling the government to pick up more wheat for domestic stocks than they had been doing previously.
They bought just under 26,500 MT of wheat for intervention today, taking the total purchased so far this season to just under 517 TMT.
The Russian National Association of Exports though say that current low prices of grain, plus the high cost of seed and other inputs could lead to "mass bankruptcies" among cash-strapped local growers and a sharp decline in cereal production this year.
Kazakhstan forecast their 2015/16 grain crop at 17.2 MMT in clean weight, unchanged from last year.
UK feed wheat prices continue to fluctuate more in line with US and French corn levels than anything else, say the HGCA. "Further volatility in US corn futures is likely to impact UK wheat futures in a similar way before greater clarity of the size of the US corn crop is obtained come harvest 2015," they add.
Currency changes will also of course be a factor, and a weak sterling in the run-up to the General Election seems like a possibility, and one that might support London wheat a little, as it seemed to today.
