London Wheat Hits Fresh Contract Lows
06/01/16 -- EU grains closed mostly lower. The pound was lower against both the euro and the dollar today, setting a fresh 9-month low versus the latter in fact as the case builds against it to maybe perform less better in 2016 than was expected a few months ago.
At the finish, Jan 16 London wheat was down GBP0.70/tonne at GBP111.10/tonne, Mar 16 Paris wheat was EUR0.75/tonne higher at EUR171.50/tonne, Mar 16 Paris corn was down EUR2.00/tonne at EUR160.25/tonne, whilst Feb 16 Paris rapeseed fell EUR1.50/tonne to EUR371.75/tonne.
The pound traded a touch weaker as analysts continue to pare back ideas of a UK interest rate rise any time soon.
A new survey of currency analysts found that only 5 of 105 now think that the UK will raise rates by May. Fully 72 of 105 now don't think that we will see even a "marginal" rate rise until the end of the year.
This renewed way for thinking for sterling, particularly in relation to the euro, could provide a modicum of support for London wheat going forwards. That's not to say that London wheat can't, and won't, yet work it's way lower from where we are today - just that it might not fare as badly against Paris wheat as most had been expecting a few months ago.
Nevertheless, both old crop May 16 and new crop Nov 16 London wheat both set a fresh lifetime contract lows of GBP113.75/tonne and GBP122.00/tonne today,
Northern hemisphere wheat appears to be in largely pretty good condition, possibly with the exception of Ukraine and maybe Russia, although recent snow in Ukraine should improve the situation there.
Competition for export business remains fierce, especially from the Black Sea region - although Ukraine look like they've concentrated the bulk of their efforts on barley into the first half of the season once again.
They're still expected to overall export a record grain volume this campaign - led by corn and wheat - and remain a bearish presence in the market for those two grains through until the end of the season.
Russia meanwhile continue to major on wheat exports, and might not be too upset to have missed out on recent Egyptian business given recent GASC problems with payments.
The fact that they haven't struck Turkey off the Christmas card list following the shooting down of the Russian jet over the Syrian border in November speaks volumes.
