Nogger's Blog

23/12/15 -- EU grains closed narrowly mixed, just for a change, with the exception of the nearby, getting technical and soon to expire Jan 16 Paris corn contract. The market seems generally to be trading water ahead of the year end in typically thin pre-holiday trade.

At the finish, Jan 16 London wheat was unchanged at GBP112.75/tonne, Mar 16 Paris wheat was down EUR0.50/tonne to EUR173.50/tonne, Jan 16 corn slumped EUR6.00/tonne to EUR151.00/tonne and Feb 16 rapeseed was EUR0.25/tonne higher to EUR374.50/tonne.

The day's most interesting development came in the form of the latest tender for wheat for Jan 21-31 shipment from Egypt's GASC.

This was won by Argentine wheat from Louis Dreyfus, of which GASC purchased two cargoes (120,000 MT in total) priced at $174.88/tonne and $176.20/tonne each on an FOB basis plus freight of $15.40/tonne on both. That takes the C&F cost up to $190.74/tonne.

These were said to be the first successful winning bids for Argentine wheat - a previous regular player in such tenders in the past - for 3 years. An interesting development following the recent leadership change and subsequent removal of the export duty on wheat in Argentina.

The best other offers on the table on an FOB basis were: French $187.42/tonne; Russian $193.00/tonne; Romanian $196.70/tonne; Ukraine $201.93/tonne.

So, Argentine wheat was priced to sell, at more than $10/tonne below the best French offer. Even adding on lower freight from France the winning Argentine bids came in on average $5.18/tonne cheaper. Whether the trade focuses in this aspect, or the fact that French wheat was more than $5.50/tonne cheaper than Russian wheat (and that Ukraine offers already seem to be drying up) remains to be seen.

Ukraine again seems to have concentrated the bulk of its wheat export efforts into the first half of the season, as is customary for them. Ukraine grain exports so far this season are now 20 MMT, up 18% versus this time a year ago. The Ukraine Ministry currently estimate full season grain exports at 36 MMT, beating the 2014/15 record of 34.8 MMT by 3.4%.

However, given the much smaller size of this year's Ukraine corn crop this might ultimately prove to be quite a tall order. Barley exports, as is typical for them, have already almost hit the anticipated total for the whole of 2015/16.

Back on the international tender front, Syria were said to have bought 200,000 MT of Russian wheat. Jordan were said to have passed on a tender for 100,000 MT of hard wheat for LH Apr/FH May shipment and immediately re-issued a fresh tender for the same.

Algeria said that they'd imported 12.3 MMT of grains in the first 11 months of 2015, a 5% increase on a year ago. Soft wheat imports were up 21.6% at 6.08 MMT.

There are a few rumblings that the current very mild weather (for the time of year) across Europe, which is forecast to last through at least until the end of the first week of January, could leave EU crops vulnerable to a sudden hard freeze (should we get one) a bit later down the line.

This was alluded to in the recent MARS crop report. "Winter crops were prevented from gaining frost tolerance due to the mild temperatures in these regions, and are now potentially exposed to frost kill if temperatures abruptly move to seasonal values - even though this is not forecast for the coming days," they said.

This is getting a bit of air-time, much as the "avalanche" of (now lost) money betting on a white Christmas was a few months ago, in what currently appears to be a "what do we talk about on a no news day like this" sort of a way.

For those growers pondering their marketing moves for 2016. hope still remains a pretty weak strategy.