EU Grains: It's All Looking Eerily Familiar

07/01/16 -- EU grains continue to drift lower for the first week of 2016. News that trading in the Chinese stock market had been suspended, with shares down more than 7% on the day, for the second time in a week didn't help.

At the finish, Jan 16 London wheat was down GBP0.40/tonne at GBP109.80/tonne, Mar 16 Paris wheat was EUR2.00/tonne lower at EUR169.50/tonne, Mar 16 corn fell EUR2.00/tonne to EUR158.25/tonne and Feb 16 rapeseed was EUR3.50/tonne easier to EUR368.25/tonne.

For London wheat this was the first sub-GBP110/tonne close since June.

Crude oil sits at new multi-year lows for the recent move, which in turn is pressuring the Russian rouble, which in turn brings the price of their wheat down.

Although the latest weather forecasts for the EU point to a continuation of the wetter than normal pattern, things are finally set to turn cooler, with colder to much colder than normal temperatures on the cards a week from now.

France is set to face the brunt of the chill-down, with temperatures expected to drop to 6-10F below normal for the time of year. Whether this will bring with it the first chances of some winter-kill damage potential remains to be seen.

"The climate in the last few months of 2015 was very favorable for wheat planting in the United States, the European Union and the Black Sea, feeding the (recent) price declines. However, with higher than normal temperatures in these places, snow cover was very superficial, putting the grain at high risks of damage if the cold returned," said FCStone.

Whilst rapeseed managed to out-perform other grains and oilseeds in 2016 is not necessarily in control of its own price destiny, warmed the HGCA. Strong supplies of soybeans and palm oil, as well as divergent currency movements also need to be considered, they say.

So, we're just a week into 2016, and things already appear to have adopted a eerily familiar look.