EU Grains Rise As Heavy Rains Pound US Wheat On The Plains

21/05/15 -- EU grains closed mostly higher, as US wheat futures rose anew as heavy rains of "biblical proportions" batter US winter wheat on the Plains immediately prior to harvesting.

The day ended with May 15 London wheat up GBP1.50/tonne at GBP111.20/tonne, Sep 15 Paris wheat jumped EUR4.50/tonne higher to EUR185.00/tonne, Jun 15 Paris corn gained EUR0.50/tonne to EUR154.50/tonne whilst Aug 15 Paris rapeseed was down EUR0.25/tonne to close at EUR359.50/tonne.

"The leading wheat district in the Texas panhandle has received 6.8 inches of rainfall in the past few weeks, more than 3 times the average," said Martell Crop Projections.

There's now up to 10 inches of further rainfall in the forecast for the Texas/Oklahoma border area across the next 7 days, according to a report on Agrimoney.

At home, the pound closed above 1.40 against the euro - a feat it has only managed to achieve a handful of times since late 2007.

Barclays altered their forecasts for the outlook of sterling, although maintaining their view that it will go in opposite directions against the US dollar and the single currency over the next 12 months.

Against the euro they now see the pound hitting 1.43 in the next quarter of 2015 (up from a previous forecast of only 1.38), before appreciating further to 1.45 in Q4 and 1.47 in Q1 of 2016.

The UK currency will however fall to 1.43 versus the US dollar in Q3 of this year (although that's better than a previous forecast of 1.39), followed by 1.42 in Q4 and 1.40 in Q1 of 2016.

If true, then this would obviously favour French wheat prices more than those in the UK, although both would likely fare better than those in the US, who's exports are already struggling.

Concerns remain over the fortunes of Russian wheat too, with hot and dry weather in the forecast there and spring wheat planting less than halfway done.

Lanworth don't appear to share those concerns though, estimating the Russian wheat crop at 60.7 MMT today - far higher than anything else in the ring. The USDA are currently only at 53.5 MMT, and some other analysts are lower than that.

Lanworth are also more bullish on wheat production prospects in Canada (31.2 MMT versus the USDA's 29.0 MMT) and Ukraine (23.2 MMT versus 22.0 MMT), although their view is a bit lower on Europe (150 MMT versus 150.3 MMT).

Separately, MDA CropCast cut their forecast for the world wheat crop by 1.37 MMT from a week ago to 712.3 MMT, due to El Nino related losses in China.

A Bloomberg survey of 34 traders and analysts in the US, Europe and Asia found 17 to be bullish on wheat prices, 11 bearish and 6 neutral.