Greek No Vote - Start Of Big Slide Or Buying Opportunity?

06/07/15 -- The overnight grains trade red across the board this morning, in what looks like a bit of knee-jerk reaction to the overwhelming Greek "no" vote over the weekend. Europe will no doubt open the same way too when trading begins here later this morning.

Is this the start of a big slide, or a buying opportunity? And if it's the latter what should you be buying?

Doing a few sums over the weekend, I can tell you that the biggest price gainer last week was Paris corn, which jumped 11.5% as of Friday night's close compared with a week previously.

Chicago corn was up 8.8% for the week, soymeal gained 5.2%, Paris wheat was up 4.6%, soybeans added 4.5%, London wheat put on 4.4% and Chicago wheat was up 4.0%.

The relative straggler was rapeseed, up only 0.9% in Paris and with gains of 1.9% in Winnepeg.

These figures are for the appropriate benchmark new crop month by the way, ie either Nov or Dec 15 depending on the commodity.

Well, rapeseed lagged because that's already put in more gains than the others in recent weeks might be the first thought into your head. It was mine.

So of course I checked back to confirm that I wasn't deluding myself, and the surprising result was that since the end of May, Paris rapeseed has actually performed the worst of all of the above commodities. It's up 8.3% versus the last day of May (and Winnepeg canola is up 14.6% incidentally).

However even London wheat has seen larger gains than Paris rapeseed, up 12.6%. Marginally the biggest advance during this time has come from Chicago wheat, adding 20.6%, closely followed by Paris corn, up 20.5%.

Now judging by various tweets and emails that have been popping into my inbox lately, the Canadian canola crop is in dire trouble, it will be lucky to make 10 MMT various people are telling me. The current official USDA estimate is 14.8 MMT, and production last year was 15.56 MMT.

If these unofficial estimates are anything like right, then that's around 5 MMT less canola that the world's largest exporter will have to sell in 2015/16. Yet the USDA currently has them shipping out 8.2 MMT in the new season, little changed from 8.8 MMT in 2014/15.

Meanwhile production in Europe is expected to be around 21-22 MMT, depending on who you believe versus 24.26 MMT a year ago, with demand up at 25 MMT.

Ukraine's crop is expected to be lower, they will have some to export to Europe as they usually do, but the vast majority of that will be shipped out in the first quarter of the new season.

Judged on recent efforts to try and buy old crop rapeseed here in late May and early June, there wasn't very much on offer at all, even when dangling a carrot of a GBP30-35/tonne premium over new crop prices.

So it doesn't look like there's going to be a lot of carryover from last year here, a situation that I suspect could be replicated on the continent.

Oil World's figure for this year's global rapeseed crop incidentally is 66 MMT, which is 2.5 MMT below the current USDA estimate and 3.2 MMT down on last year.

ABARES peg Australian canola plantings at 2.35 million ha, down 400k ha, or 14%, on a year ago. They estimated Australia's 2015/16 canola exports at 2.18 MMT last month, down 11.3% from a year ago and the lowest since 2010/11.

A mid-June Thompson Reuters crop tour of France recently concluded that rapeseed yields there could be down 10-15% in the normally most productive Centre region due to spring dryness. Agritel said last week that early French yields are "much lower than last year". Germany's crop is also expected to be down as much as 20% year-on-year.