EU Grains Mostly Higher For A Third Day

Posted by Nogger - a legend in his own mind at 12:28 | Categorized as

22/10/15 -- EU grains traded mostly higher for a third day in succession, although Paris rapeseed was slightly off last night's 10-week highs for a front month.

At the close, Nov 15 London wheat was up GBP0.55/tonne at GBP114.05/tonne. In Paris, Dec 15 wheat was EUR2.0/tonne higher at EUR177.75/tonne, Nov 15 corn was up EUR0.50/tonne to EUR164.00/tonne and Nov 15 rapeseed was down EUR1.00/tonne to EUR380.75/tonne, although other months ended around EUR2.00/tonne higher.

The pound was up sharply against the euro following the news that September UK retail sales were well ahead of expectations. Month-on-month growth of 1.9% smashed market ideas of an advance of only 0.3%. Annual sales growth is now 6.5% versus market expectations of 4.8%.

With numbers like that traders are wondering how much longer can the Bank of England argue that the UK economy isn't strong enough to handle a modest interest rate rise. One or two are even suggesting that the UK could break ranks and beat the US to it to become the first major central bank to begin raising rates.

The ECB met today, and said that that would re-examine their eurozone QE program in December. Any increase in that would put the euro back onto the back foot again.

A Reuters survey estimated the GBP/EUR exchange rate at 1.40 by the end of the year, Lloyds predict 1.47 and Barclays at 1.43 are somewhere in the middle. Again, all of this points towards Paris grains out-performing London wheat in the months ahead.

Malaysian palm oil futures closed higher overnight, and are now around 23% up on their late August lows on the back of El Nino-related production worries.

Oil World said that oil palms in many parts of Malaysia and Indonesia have been further stressed by the ongoing very dry conditions that they've experienced in the first 20 days of October.

This is one of the factors supporting rapeseed prices at the moment. Another is the fact that Ukraine's 2015 rapeseed production was low, and that is expected to fall significantly further in 2016 as dryness there means that only around 75% of the intended area got sown this autumn.

The FAO forecast that Algeria will import 7.2 MMT of wheat in 2015/16 versus their previous 5-year average of 6.0 MMT. Chief supplier is usually France, although they regularly also buy wheat from Canada, Spain, the US, Germany and Mexico.

Bangladesh are reported to have rejected a 20,000 MT cargo of French wheat for failing to match the tender specifications. This is not the first time that this has happened in recent months.

Ethiopia are said to be in the market for 1 MMT of wheat, with the results expected tomorrow. Black Sea origin material is rumoured to be the cheapest offer.

Rusagrotrans estimated Russia's October grain exports at 3.5 MMT versus 3.42 MMT a year ago. Wheat will account for around 77% (2.7 MMT) of that total, they predict.

Russia's Jul/Oct grain exports are called at 14.62 MMT, down 2% on a year ago. That includes wheat shipments of 11.51 MMT (down 6.5%), barley exports of 2.17 MMT (up 13.6%) and those of corn of 845 TMT being up nearly 45%.

Kazakhstan said it's 2015 grain harvest was just about finished at 19.83 MMT, some 4 MMT more than was produced a year ago.