EU Grains Mixed, Euro Choppy After Surprise Rate Cut
10/03/16 -- EU grains closed mixed. The market on the continent garnered some support from news that the ECB had cut interest rates again and was raising quantitative from EUR60bn to EUR80bn a month. That support however had disappeared by the close.
At the finish, front month Mar 16 London wheat was up GBP0.15/tonne at GBP101.35/tonne, May 16 Paris wheat fell EUR0.50/tonne to EUR154.25/tonne, Jun 16 Paris corn was down EUR1.25/tonne to EUR151.75/tonne and May 16 Paris rapeseed fell EUR1.25/tonne to EUR349.75/tonne.
The ECB news initially saw the euro fall, with the pound rising above 1.30 against the single currency and with the former dropping close to 1.08 versus the US dollar. That weakness however proved to be short-lived, with trading values late in the day back up above last night's closing values - and significantly so.
Early Russian spring grain planting is well ahead of year ago levels, aided by unusually warm weather. The Russian Ag Ministry said that planting works had been completed on almost 440k ha versus only 116.5k ha this time a year ago.
Ukraine's early spring plantings are also well advanced for the time of year at 146k ha (6% done).
Tunisia tendered for 67,000 MT of milling wheat and 25,000 MT of feed barley for June/July shipment. France would normally be expected to put in a bold showing to win that business. Iraq are said to have cancelled a tender for hard wheat.
Exports from France’s largest grain port of Rouen fell 10% in the week of March 9th to 283 TMT, including 61.5 TMT of soft wheat to Algeria and 55 TMT to Morocco.
Winter wheat and barley crop conditions in France are looking good at 94% and 91% good to very good respectively as of last Monday. As we enter the final quarter of 2015/16 stocks of both are the highest in years.
"In the short-term, there are no fundamental reasons for price levels to change. Stocks in the EU and worldwide are ample and the moderate effect of El Niño on markets is already incorporated in price expectations. Unless new weather events change the crop development progress, there is no reason for higher cereal prices," the EU Commission said earlier this week.
"Early forecasts for the 2016/2017 harvest are showing a good level of cereal production at around 310 million tonnes in the EU, slightly above the 2015/16 harvest," they added. That will be aided by a sharp rebound in corn output more than compensating for a 5% decline in soft wheat production.
Carryover stocks at the end of 2015/16 will also be unusually high too, of course.
