New Lows For EU Wheat, But Rapeseed Sets Fresh One Year High

28/04/15 -- EU grains closed mixed, but wheat pressed on to new lows for the recent move.

At the finish, May 15 London wheat was down GBP0.70/tonne at GBP111.75/tonne; May 15 Paris wheat was EUR1.75/tonne lower at EUR177.75/tonne; Jun 15 Paris corn was down EUR1.25/tonne at EUR158.25/tonne; May 15 Paris rapeseed was EUR2.00/tonne higher at EUR378.75/tonne.

Whilst wheat both sides of the Channel was setting new 5-6 month lows, following last night's near 5-year low close in Chicago, rapeseed closed at a one year high for a front month. New crop Nov 15 Paris rapeseed set a contract high EUR366/tonne on Friday, although it's retreated a little since then.

The old crop May 15 versus new crop Nov 15 London wheat spread ha snow narrowed to GBP8.30/tonne, down from GBP10.05/tonne just last Friday, although that still represents an unusually large premium. The Dec 15 Paris wheat contract, which had been running at only a very small premium of a couple of euros or so to the old crop May 15 position, now stands at a quarter of a euro discount.

Widespread rains across much of the UK today, and more in the forecast for the Bank Holiday weekend, will bring some welcome and needed moisture for many UK growers - particularly those in the south east.

News that UK economic growth slowed to just 0.3% in Q1 of 2015, down from 0.6% in the last quarter of 2014, seemed to make little difference to the pound. That closed above 1.53 versus the US dollar for the first time since Mar 3.

Sterling also continues to threaten to break through the 1.40 level against the euro - it hasn't spent any prolonged time up there since late 2007.

This apparent strength in the UK currency won't do anything to aid export hopes in either crop year. New crop Russian/Ukraine 12.5% milling wheat is quoted around the $190-195/tonne region FOB the Black Sea. That's the equivalent of around GBP124-127.50/tonne, which makes the Nov 15 London feed wheat future look expensive at GBP120/tonne or thereabouts.

Russia said that they'd planted spring grains on 4.1 million ha so far, that's 13.2% of the expected area, and 1.2 million less than had been sown this time a year ago as wet weather has been holding things back.

That total includes 420.7k ha of wheat, 2.2 million ha of barley, 793.3k ha of corn and 991.7k ha of sunflowers.

Ukraine said that they'd planted early spring grains on 2.1 million ha, or 91% of the expected area. Most of that is barley (1.6 million ha, or 90% of intentions). They've also sown over 1 million ha of corn, around a quarter of the intended area, and 1.4 million ha of sunflower (about a third of expectations).

UkrAgroConsult said that they expect the combined grain output in Ukraine, Russia and Kazakhstan to fall around 9% to 164 MMT this year, down from 180.5 MMT in 2014. Exports from the three could drop 8.6% to 64 MMT, they added.

APK Inform said that Ukraine farmers would plant a record 2.15 million ha of soybeans this year, a 19% rise compared to 2014, as they search for a more potentially profitable (and less input hungry) spring crop than corn. Output was forecast to rise 8% to 4.2 MMT, much of which will be destined for Europe.

Egypt said that they'd bought 447 TMT of wheat on the domestic market since they began their government purchasing programme around a week ago. They expect to eventually buy 3.7 MMT locally, and ultimately aim to cut their reliance on imports.