EU Wheat Remains Under Pressure From Sluggish Exports

26/02/16 -- EU grains closed mixed on the day, but mostly lower for the week.

At the finish, front month Mar 16 London wheat was down GBP0.40/tonne at GBP101.50/tonne, Mar 16 Paris wheat fell EUR0.25/tonne to EUR145.25/tonne, Mar 16 Paris corn was up EUR1.50/tonne to EUR146.25/tonne and May 16 Paris rapeseed was up EUR1.50/tonne to EUR350.00/tonne.

For the week that puts nearby London wheat GBP2.75/tonne easier, with Paris wheat down EUR6.75/tonne, corn - the only net weekly gainer - up a quarter of a euro, and rapeseed EUR3.75/tonne easier.

Although the differential between old crop May 16 and new crop Nov 16 London wheat was reduced a little today, it still ends the week a touch higher than it began it at GBP12.40/tonne - the equivalent of more than a GBP2.00/tonne per month carry.

That's a large sum, an one that partially explains the unusually large volume of old crop currently being carried potentially into 2016/17.

You'd have to say that this weighty gap between old and new crop can't last forever, and at the moment there's nothing on the horizon looking likely to come along galloping to the rescue of old crop. Additionally, current new crop sales commitments are light, potentially adding further pressure to this position as it draws nearer (especially for those with a barn full of old crop still to place).

We are now almost two thirds of the way through the 2015/16 export campaign. This week's soft wheat export licence total of 761 TMT from Brussels takes the EU-28 total so far to 17.7 MMT, which is 15% down versus 20.8 MMT this time last year.

Barley export certificates of 302 TMT take the 2015/16 total to 6.9 MMT, up 11% compared to 6.9 MMT at this point in 2014/15. Corn import licences meanwhile stand at 9.5 MMT.

Having started off rather slowly, wheat exports have picked up of late, and a decline of 15% year-on-year is where we have now been at for the past few weeks. The problem there is that the USDA only see these falling 8% this season. Barley exports meanwhile have slowed up - they were running more than 30% of last season at the start of 2016 - although the USDA currently predict these falling year-on-year by 15%.

FranceAgriMer kept their estimate on both French the winter wheat and barley crop conditions unchanged form a week ago today at 94% good to very good, both being 4 points ahead of this time last year.

The Russian Ag Ministry increased their forecast for spring grain plantings to 31.05 million. The area under corn will rise sharply from just under 2 million to almost 3 million ha, they say.

Spring plantings are just about underway in Russia, a bit earlier than normal under much warmer than usual conditions.

Morocco are tendering for 132,500 MT of barley on the domestic market. Their 2016 grain crop is likely to be significantly reduced by dryness this year. so we can expect a bit more import activity from them later in the season.