London Wheat Falls, As Paris Markets Gain On Weak Euro Outlook
23/10/15 -- EU grains closed mixed on the day and for the week. London wheat was lower on both counts due to the firmer sterling/weak euro.
At close, Nov 15 London wheat was down GBP0.55/tonne to GBP113.50/tonne, Dec 15 Paris wheat was up EUR1.25/tonne at EUR179.00/tonne, Nov 15 Paris corn was EUR1.00/tonne firmer at EUR165.00/tonne, whilst Nov 15 Paris rapeseed was EUR0.50/tonne lower at EUR380.25/tonne.
For the week, London wheat shed GBP0.75/tonne, whilst in Paris wheat gained EUR2.75/tonne, corn advanced EUR3.75/tonne and rapeseed rose EUR2.75/tonne.
The euro finished the week sharply lower, down 2.2% against the pound at 1.39 and 3% lower versus the dollar at 1.10. The move came following the monthly policy decision at the European Central Bank on Thursday where ECB Predident Draghi indicated that increased QE and a further cut in the deposit rate from the current level of -0.2% was a possibility.
The weaker euro was consistent with many analyst's forecasts calling for sterling to be in the 1.40-147 range by the end of the year, and the EUR/USD rate to fall to 1.03-1.05 before hitting parity in Q1 of 2016.
At the risk of repeating myself, this continues to point to Paris grains out-performing London and Chicago grains in the coming months.
It should also help EU exports, although the news that Brussels issued more barley export licences than they did for soft wheat this past week doesn't read too friendly for wheat just yet - the competition from the Black Sea remains a little too intense for the time being.
Soft wheat export licences this week came in at 278 TMT, down 33% on last week, taking the season to date total to 6.47 MMT. That's 29% below the 9.1 MMT worth of licences that had been issued this time a year ago. For barley however the story reads better. Export licences this week totalled 282 TMT, taking the season so far cumulative total to 4.1 MMT, which is 41% above those of a year ago.
EU corn import licences this week were 328 TMT, making the total for the season to date 2.3 MMT, down only a little on 2.5 MMT a year ago.
If there is some upside for Paris wheat, aided by the weak euro, then it's probably already priced-in, according to Rabobank. In their latest monthly market report and price forecasts they predicted Paris wheat at EUR180/tonne in Q1 of 2016, rising to a peak of EUR185/tonne in Q2 before falling back to end next year at EUR180/tonne. Dec 16 Paris wheat closed at EUR191/tonne tonight.
Concerns about dryness holding up plantings in southern/central Russia and Ukraine remain, although some rains are said to have now reached the area. The Ukraine Ag Ministry said that winter grain plantings had been completed on 5.96 million ha, or 81% of the original target. A year ago that figure was a little over 1 million ha higher.
Winter wheat plantings in Ukraine are said to be 84% complete on 5.2 million ha, and winter barley sowings are only 58% done on 611k ha.
In Russia meanwhile the Ag Ministry say that winter grain plantings are 90.7% complete on 15.5 million ha versus 16.2 million a year ago at this time.
The Russian Ag Ministry went on to say that at 99.5% complete, both the 2015 wheat and barley harvests are just about over. Wheat production in bunker weight is said to be 63.7 MMT versus 60.9 MMT a year ago, barley output is reported at 18.2 MMT versus 20.9 MMT in 2014.
In other news Oil World reported that the EU imported 14.17 MMT of soybeans in 2014/15, up 4% versus 13.62 MMT in the previous marketing year.
FranceAgriMer reported that the 2015 French corn harvest was 58% complete as of Monday, up from 38% done a week previously and versus 32% this time last year. French winter wheat plantings (excluding durum) are 58% done, which is 8 points up on a year ago. Winter barley sowings at 78% complete are 7 points ahead of last year.
