EU Grains Mostly Higher, Fresh News Scarce

25/01/16 -- EU grains began the week mostly on a positive note, although rapeseed was mixed not helped by crude oil being back under pressure.

At the finish, Mar 16 London wheat was unchanged at GBP110.30/tonne, Mar 16 Paris wheat was up EUR2.75/tonne to EUR167.00/tonne, Mar 16 corn rose EUR0.25/tonne to EUR159.25/tonne and Feb 16 rapeseed was also up EUR0.25/tonne to EUR360.00/tonne.

Fresh news was limited to start the week. One item of note reported on Reuters though was that the Russian Ag Ministry said that they "haven't ruled out a tightening of restrictive measures on grain exports".

The current measures were introduced when the Russian rouble was trading well below the current level of around 80 against the greenback (it even hit an all time low 85 on Thursday), and the very notion of simply publicly admitting that the Russian currency might ever weaken to such an extent was incomprehensible.

Not any more it would seem. Whilst on the one hand an export duty tied to the value of the RUB/USD means generally favourable domestic wheat price for Russian growers, it also punishes the livestock industry AND increases the amount of duty that needs to be paid when selling wheat abroad. Going forward it also potentially dramatically increases input costs for the 2016 crop.

The duty problem is exacerbated by the fact that the exporter has no idea what the final amount payable will be when he sells the wheat, that is determined at the time of the actual shipment itself.

The latest mutterings, whilst not halting Russian exports, does cast a fairly large cloud of uncertainty over them.

Any changes to the tariff will therefore be watched with interest, to see if they appear designed at supporting the Russian livestock industry or the grain producers.

The Russian Ag Ministry said today that the country had exported 21.34 MMT of grains so far this season (to Jan 20), a 3% reduction on a year ago. That includes just under 16 MMT of wheat, 3.3 MMT of barley and 1.9 MMT of corn.

The Russian export watchdog (Rosselkhoznadzor) are using figures somewhat higher (admittedly for a slightly different period to Jan 25). They say that 1.36 MMT of grain has been exported so far this month, taking the season to date total to 24.3 MMT, including 16.9 MMT of wheat. Note though that the official Ministry numbers don't include exports to some "preferred" country's such as Kazakhstan.

APK Inform say that Russian seaports exported 328.3 TMT of grains last week, up from 310.2 TMT the previous week, including 237.7 TMT of wheat, 75.5 TMT of corn and 15.1 TMT of barley.

The same analyst says that Ukraine's seaports exported only 298 TMT of grains last week, down sharply from 478.6 TMT the previous week. Last week's volume comprised 136 TMT of wheat, 155.5 TMT of corn and 6.5 TMT of barley.

On the international tender front, Tunisia said that they'd bought 92 TMT of soft wheat and 50 TMT of feed barley, both of optional origin for Apr/May shipment. India said that it had finalised the purchase of 255,500 MT of Ukraine corn.