EU Grains Grind Mostly Lower For The Week

22/01/16 -- EU grains closed mixed, but mostly a touch higher. It was London wheat's turn to fall today, with the pound consolidating from earlier in the week nerves to close steadier against both the euro and US dollar.

At the finish, new front month Mar 16 London wheat was down GBP0.45/tonne at GBP110.30/tonne, Mar 16 Paris wheat was up EUR0.25/tonne to EUR164.25/tonne, Mar 16 corn rose EUR1.00/tonne to EUR156.00/tonne and Feb 16 rapeseed jumped EUR3.25/tonne to EUR359.75/tonne.

For the week, that puts London wheat GBP1.30/tonne lower, with Paris wheat and corn both down a euro, and rapeseed up EUR2.50/tonne.

On the old crop/new crop spread, May16/Nov16 wheat closed at GBP9.00/tonne versus GBP8.50/tonne a week ago and GBP7.65/tonne the week before that.

So, we have a market still grinding lower, rather than on that appears to be in free fall.

Brussels confirmed that they'd released 511 TMT worth of EU soft wheat export licences this past week, a 32% decline versus a week ago. France picked up 36% of that total.

Season to date export licences now stand at 14.02 MMT (with French wheat getting 29% of that), some 13% down compared with a year ago.

Barley export licences this past week were 155 TMT, a 5.5% fall compared with last week and season to date licences of 5.92 MMT are up 24% versus 12 months ago.

A notable "eyebrow raiser" this week is that corn import licences totalled 941 TMT this week - almost double the volume of soft wheat exports approved. That takes the season so far total to 8.11 MMT, up 62% compared to this time a year ago.

The size of EU wheat exports, and the pressure of large corn imports then are two areas that are concerning the market. Meanwhile lurking in the background is the spectre of very large wheat carryover stocks all over Europe and the world.

Slightly lower world wheat production in 2016/17 seems for now to be more than compensated for by record large 2015/16 ending stocks.

Global demand is good, but buyers can afford to be choosy.

Following yesterday's tender, Egypt's GASC said that they now had enough wheat bought to last them through to May 11. Such announcements are routine, and certainly don't rule them out of tendering again soon, although they appear to have a few problems of their own to iron out first.

They may be the world's largest wheat buyer, but they aren't necessarily the most desirable name to have on your books. Argentina appear to really only have feed wheat to sell now. Having struck a clean sweep in the previous GASC tender, they didn't even put up an offer yesterday.

The oil-led weakness of the Russian rouble is an interesting 2-sided influence for Russian wheat exports. On the one hand it make the rouble-based export prices look quite attractive, but on the other it also raises the export duty payable on the sale (to around $12/tonne based on the rouble falling below 80 to the US dollar this week, according to Agritel).

Jordan cancelled a tender for 100,000 MT of hard wheat and immediately re-tendered for the same, Tunisia are said to be in the market for 92,000 MT of soft wheat and 50,000 MT of feed barley, both of optional origin.