EU Grains Under Pressure From Greek Vote, But Recover Some Composure By The Close

Posted by Nogger - a legend in his own mind at 18:42 | Categorized as

06/07/15 -- The market reacted to news of the resounding Greek "no" to austerity vote by trading red across the board for much of the day, when European grains opened they following suit. Crude oil and equities also took the news badly, as the market developed a "risk off" look to start the week.

By the close of European trade though, most grains were well off the lows of the day, and seemingly looking to get back to trading the fundamentals.

At the finish Jul 15 London wheat was down GBP0.10/tonne to GBP120.15/tonne, Sep 15 Paris wheat managed a net gain of EUR0.25/tonne to EUR204.25/tonne, Aug 15 Paris corn was down EUR2.25/tonne to EUR191.505/tonne, whilst Aug 15 Paris rapeseed slumped EUR6.75/tonne to EUR387.50/tonne.

The euro was predictably under pressure, with EU leaders set to meet today to discuss the implications of the vote. Greece's Economy Minister told the BBC that the ECB had to keep Greek banks alive for seven to 10 days so that negotiations could take place over the country's next move. Their banks are said to be running out of funds and on the verge of collapse.

Some weekend rain relief was seen in parts of Europe, and more is expected for some areas later in the week too. The BBC however reported that temperatures hit 40.3 C in Germany yesterday, a record high for the month of July.

There was talk that weekend rains in some of the soggiest parts on the US Midwest weren't quite as heavy as had been forecast. A drier and warmer outlook for the region added to the bearish tone to start the week.

It wasn't all one way traffic though. In Spain, Asaja said that the dry May and searingly hot June could cut wheat and barley production this year to 33% below the 10-year average.

Spanish analysts Agroinfomarket cut their forecast for the soft wheat crop there this year from 5.483 MMT a month ago to 5.065 MMT, a 9.4% decline on a year ago. They raised their Spanish soft wheat import forecast in 2015/16 from 3.7 MMT to 3.875 MMT, and cut ending stocks from 686 TMT to 578 TMT, a sharp 30% decline versus those at the end of 2014/15.

Algeria said that they'd bought 500 TMT of soft milling wheat at prices said to be around $238/tonne C&F for new crop August shipment.

APK Inform said that Ukraine seaports stepped up their export efforts last week, shipping out 478.6 TMT of grains, more than double the volume exported the previous week. Last week's shipments included 120.4 TMT of wheat and 358.2 TMT of corn.

Top export home for Ukraine's grain last week was Italy, followed by Israel, Belgium and China.

At  home, the well regarded John Nix Pocketbook says that feed wheat is the most profitable crop to plant for the 2016 harvest, showing a potential gross margin of GBP658/ha.

That lifts the grain into top spot from only fourth in 2015, leapfrogging marrowfat peas, blue peas and winter beans.

Up from fifth into second place for 2016 goes milling wheat, with a gross margin of £637/ha. Spring malting barley is in third next year at GBP524/ha, and rapeseed jumps from a lowly twelfth in 2015 to fourth, with a gross margin of £522/ha.