Paris Grain Get Boost From Euro Weakness

Posted by Nogger - a legend in his own mind at 08:57 | Categorized as

17/11/15 -- EU grains closed mixed. French markets traded mostly a bit higher following a renewed bout of euro weakness.

At the close, Nov 15 London wheat was down GBP0.65/tonne at GBP111.60/tonne. In Paris, Dec 15 wheat fell EUR0.75/tonne lower to EUR175.25/tonne, Jan 16 corn was EUR0.25/tonne firmer at EUR167.50/tonne and Feb 16 rapeseed jumped EUR5.25/tonne to EUR377.00/tonne.

The pound rose to 1.43 versus the single currency, and now seems to be setting its sights on a test of the 2015 high of 1.44 - a push above that would see the UK currency at its best level against the euro in more than 8 years.

The euro also fell to around 1.0650 against the US dollar today, close to the 2015 low of around 1.05, which itself was a 12-year low.

The outlook for further euro weakness in the months ahead is one of the few bullish straws that French wheat has to grasp at in the current market. It should certainly aid export demand going forward, but we've seen little hard evidence of this theory being turned into practise too much so far this season with EU soft wheat export licences currently down 31% year-on-year.

News today that French silo operator Socomac had been forced to close their Rouen facility for the intake of wheat - following the lead of Senalia (and also Dunkirk-based Nord Cereales) last week - due to slack export demand, still leans bearish.

France still has a record wheat crop to place this season of course, and competition from Russia in particular remains fierce even if Ukraine now seems to be concentrating its efforts more on corn. Over 70% of Ukraine's grain exports via seaports last week were corn

The Ukraine Stats Office said that domestic grain stocks in commercial hands were up 60% as of Nov 1 at 31.7 MMT, including 14.4 MMT of wheat, 2.6 MMT of barley and 12.9 MMT of corn. Harvesting of the latter crop is now winding down and was 90% done as of yesterday.

Live concerns remain about the prospects for Ukraine's 2016 winter-sown crops. Winter wheat plantings are only 90% complete on 5.6 million ha, with barley sowings 82% done and the winter OSR area is only sown on 79% of the government's original forecast.

UkrAgroConsult have cut their forecast for the 2016 Ukraine wheat crop from 19 MMT previously to only 17.5 MMT - that would be the lowest since 2012. Output this year was said to be 27.3 MMT by the State Stats Service, so if correct this would be a drop of nearly 36%.

Separately, Agritel said that 36% of Ukraine's winter grain plantings have still yet to emerge due to earlier dryness and late sowings.

Russia said that its 2015 total grain harvest was 98.9% complete at 107.8 MMT in bunker weight. The corn harvest is 86.6% finished at 12.2 MMT. The Russian Ag Minister said that the country would bring in a clean weight grain harvest in excess of 102 MMT this year versus 105.3 MMT a year ago.

He forecasts total winter grain plantings for the 2016 harvest at 17.1 million ha, similar to a year ago, although only 16.3 million ha of that has been sown so far.

At home, the HGCA said that the UK OSR area for the 2016 harvest would fall 14% to 565k ha - the lowest seeded area since 2009. "The Early Bird Survey results are pointing to a static wheat area and the winter barley area is expected to decline marginally by 4%. The spring barley area, however, is anticipated to continue its growth and is expected 10% higher, year on year, at 727K ha," they said. The latter would mark the largest UK spring barley area since 2009 as the crop enjoys something of a renaissance.