Nogger's Blog

19/01/16 -- EU grains closed mostly a touch higher. US markets re-opened following yesterday's Martin Luther King Day holiday, but activity was light.

China continues to unsettle the markets. News today that economic growth of 6.9% there in 2015, whilst stellar just about everywhere else around the globe, was actually the slowest rate of increase in 25 years. It was still however in line with expectations of "around 7%" although 0.4 points down versus 2014. Is the glass half full or half empty?

The news out of China, plus weaker than expected UK growth, had BoE governor Carney retracting his words of 2015, and indicating that a UK interest rates rise was now probably way off. Some analysts are now saying this won't now happen until 2017, contrary to the widespread belief that Q1, or Q2 at the latest, of 2016 was the most likely time that we'd see rates here finally start to rise from their historic low.

That had the pound under pressure again, lending a little bit of underlying support to London wheat. The pound was trading below 1.30 against the euro as EU grains closed.

There's precious little evidence yet that sterling weakness is stimulating export interest that much, and UK stocks are still at historically very high levels. Lucky then that the old crop/new crop spread continues to provide enough of a financial incentive for that situation to remain in place. At least for now.

At the finish, Jan 16 London wheat was GBP0.50/tonne higher at GBP109.70/tonne. In Paris, Mar 16 wheat was flat at EUR165.50/tonne, Mar 16 corn rose EUR1.50/tonne to EUR156.50/tonne and Feb 16 rapeseed was EUR0.75/tonne higher at EUR358.75/tonne.

Ukraine said that they might increase spring barley plantings by 22% this year, following lower than anticipated winter sowings and a possible rise in winter crop losses. That would take the spring barley area up to 2.2 million ha.

It's business as usual for Ukraine's grain exports, which totalled 478.6 TMT last week. That included only 51 TMT of wheat,. The remainding 427.6 TMT was corn, as they now seemingly concentrate their efforts on the latter grain.

Ukraine's barley export effort for 2015/16 is pretty much already done, it would seem. That may provide a mini boost for EU barley exports now for the remainder of the season, and these are already up 29% compared to 12 months ago.

Russia's grain exports were a bit more restricted, hampered by bad weather and their prolonged holiday hangover. Their seaports only shipped out 310.2 TMT of grain last week, of which 255.4 TMT was wheat, 17.3 TMT was corn and 31.7 TMT was barley.

Russia's total grain exports this month might fall to only around 1.5 MMT, according to Rusagrotrans. That will include around 1.0 MMT of wheat, they said. The reason for dip is given as the extended holidays and the current freeze, but "normal service" is expected to be resumed before long, especially with the value of the Russian rouble so closely tied to that of crude oil. Brent set a new 12-year low today.