EU Grains Build On Friday's Gains, Greek Tragedy Weakens Euro Further

Posted by Nogger - a legend in his own mind at 12:26 | Categorized as

29/06/15 -- EU grains traded higher, playing catch-up with strong gains posted in US markets on Friday night, and with Paris grains supported by further euro weakness.

At the close, Jul 15 London wheat was up GBP2.90/tonne at GBP117.70/tonne, Sep 15 Paris wheat was EUR4.275/tonne higher at EUR198.50/tonne, Aug 15 Paris corn was up EUR5.25/tonne at EUR178.750/tonne, whilst Aug 15 Paris rapeseed traded EUR0.75/tonne firmer at EUR392.00/tonne.

News that talks between Greece and its creditors failed to reach an agreement (again) over the weekend, and the Greek government have now announced that banks there will be closed all week, with cash withdrawals limited to just EUR60/day to try to prevent a further run on bank deposits, saw the pound rise as high as 1.43 against the euro at one point - a level that hasn't been seen since 2007.

William Hill have apparently closed their book on betting on a Grexit saying that the situation is now too volatile. Others still have Greece remaining in the Eurozone as an "odds-on" favourite, although it's starting to look like not as big a certainty as it was.

Betfair puts it as a 67 percent chance that Greece will stay in the eurozone this year, down from an 86 percent chance only a week ago, report Bloomberg.

The IMF will be anxious to check their post in the morning, with a $1.6 billion Greek repayment falling due. I suspect that they will discover that Finance Minister Yanis Varoufakis was out of the office and unable to sign that one some how.

For now, Barclays maintain their view on a pound/euro exchange rate of 1.45 by the end of the year, rising to 1.47 in Q1 of next year.

Further euro weakness down the line should continue to be friendly for Paris grain prices.

In other news, the Canadian Wheat Board estimate this year's canola crop there at 12.6-13.0 MMT, down 16.5-19.0% on last year's 15.56 MMT, and around 2 MMT below the USDA's current 14.8 MMT forecast.

That's just the latest in a series of downgrades for rapeseed production around the globe this year, with sharp falls in output also being predicted in the UK, France, Germany, Poland, Ukraine and Australia too.

APK Inform reported that Russian seaports exported 198 TMT of grains last week, down from 336.6 TMT the previous week. Last week's total included 156 TMT of wheat, 24.8 TMT of corn and 13.9 TMT of barley.

The Russian Ag Ministry say that this season's grain exports (to Jun 24) are now in excess of 30 MMT, including 21.3 MMT of wheat (a 17% increase on a year ago), 5.3 MMT of barley (up more than 200%) and 2.9 MMT of corn (down 27%).

APK Inform said that Ukraine's seaport grain exports were also down sharply last week, at 233.2 TMT versus 575.8 TMT the previous week. Last week's total included 78.7 TMT of wheat and 154.5 TMT of corn.

The Ukraine Ag Ministry said that the country had now exported 34.36 MMT of grains (to Jun 26) this season. That includes 10.83 MMT of wheat, 4.46 MMT of barley and 18.8 MMT of corn.

They also said that he country had now harvested 280.4 TMT of new crop grains and pulses (mostly winter barley), with yields averaging 2.6 MT/ha, along with 7.2 TMT of winter rapeseed, for which early yields have averaged 1.68 MT/ha.