EU Grains Mostly Higher - Rapeseed Hits 10-Week High

Posted by Nogger - a legend in his own mind at 12:53 | Categorized as

21/10/15 -- EU grains finished mostly higher, in a fairly quiet news-light day. Nov 15 Paris rapeseed pressed on to a new highest close for a front month in 10 weeks.

At the close, Nov 15 London wheat was up GBP1.00/tonne at GBP113.50/tonne. In Paris, Dec 15 wheat was EUR0.25/tonne firmer at EUR175.75/tonne, Nov 15 corn was EUR2.25/tonne higher at EUR1630.50/tonne and Nov 15 rapeseed was EUR2.50/tonne steadier at EUR381.75/tonne.

Russian material was said to be the lowest offer in Iraq's recent tender for hard wheat, at a reported $254 C&F.

The 2015 Russian grain harvest is now said to be 97% complete at 104 MMT. Wheat and barley harvesting are both said to be 99.3% complete at 63.7 MMT and 18.2 MMT respectively. The corn harvest is reported at 64.5% done on 1.8 million ha for a crop of 9.0 MMT so far.

Russian winter plantings for the 2016 harvest are said to be approaching 90% done on 15.3 million ha. Weather models are now in fairly close agreement predicting above normal precipitation for most of the Russian winter grain areas across the next 15 days. Normal to warmer than normal temperatures are also now forecast in the region from Friday onwards.

The first rains in a month have finally appeared on the main Ukraine plains, after a lengthy period of a water shortage, said Agritel. Low intensity rains have now fallen for the last 24 hours. These are gaining in intensity and the depression causing them will migrate eastward and should allow Russian regions to benefit as well, they add.

The minutiae of yesterday's delayed Defra report into UK 2015 yields shows that the top yielding wheat region in England this year was Yorkshire and Humberside with an average 9.5 MT/ha, followed by the North East and East Midlands, both achieving 9.0 MT/ha.

Yorkshire and Humber also easily topped the English winter barley table with a very impressive yield of 9.1 MT/ha, and ditto spring barley with yields of 7.2 MT/ha.

Yorkshire and Humber shared top spot honours with the North East as the top English rapeseed area, with yields in both averaging 4.0 MT/ha.

That's not quite the full story though, a special mention must go to Scotland. They beat Yorkshire and Humber in wheat with an even better yield of 9.7 MT/ha, and on rapeseed (4.2 MT/ha) as well, and were second in the UK winter barley table (8.3 MT/ha) and joint third with regards to spring barley yields (6.2 MT/ha). They were also incidentally the top oat yielding region in the UK with an average of 7.0 MT/ha.

Of course all this success comes at a cost. A Scottish wheat crop in excess of 1 MMT for the first time since 1992 means that the premium being paid for wheat north of the border is one of the lowest since the start of the century, say the HGCA.

So far in 2015/16, average UK ex-farm prices are currently at their lowest levels since 2009/10. The July-October average UK ex-farm feed wheat price this season is down more than GBP8/tonne compared with last season and almost GBP45/tonne lower than in 2013/14, they add.

A Reuters poll forecast the GBP/EUR exchange rate at 1.40 by the end of the year, rising to 1.4365 by the end of Q1 in 2016. These forecasts are consistent with the predictions discussed yesterday made by Bank of America Merrill Lynch and Barclays.

Standard Chartered meanwhile say that the pound and dollar should both outperform their G10 and Asian rivals over coming months, but that the GBP/USD rate will continue to struggle to break through and hold above the 1.55 area.

The general consensus among most of these market analysts is that the Fed may still raise US interest rates around the end of the year, and that the Bank of England will follow suit here fairly early in 2016. If they're right, then we can expect Paris wheat to do better than it's London and Chicago counterparts over the remainder of the season.