London Wheat Closes Below GBP100/tonne For First Time Since Jun 2010

01/03/16 -- EU grains closed lower, with wheat setting lifetime contract lows on both sides of the Channel. London wheat slipped below the GBP100/tonne mark, to close at the lowest level for a front month since Jun 2010.

At the close of trading, Mar 16 London wheat was down GBP1.95/tonne at GBP99.75/tonne. In Paris, Mar 16 wheat was EUR2.25/tonne lower at EUR145.00/tonne, Mar 16 corn was down EUR0.25/tonne at EUR146.50/tonne and May 16 rapeseed fell EUR2.75/tonne to EUR347.00/tonne.

So, the horror show goes on, for London wheat in particular. The only crumb of comfort that can be gathered there, if you're a grower, is that the old crop May 16/new crop Nov 16 premium widened to GBP12.60/tonne. Even so, Nov 16 still fell GBP1.65/tonne versus yesterday and now sits at a new contract low of GBP114.45/tonne.

Things are only marginally better for French wheat, closing half a euro above today's lifetime contract low set on the Mar 16 position.

Winter wheat conditions are pretty good across the majority of the continent as the crop wakes up from dormancy, and production levels only marginally below last year's record output are what analysts are currently factoring in.

That's true also on a global level, with Australia's ABARES today forecasting the global wheat crop at 710 MMT in 2016/17, down 2.6% compared to 729 MMT last year. Carry-in stocks left over from this season meanwhile are predicted at all-time highs.

Strong competition from the likes of Russia is one of the reasons that stocks are so high. They exported 3 MMT of grains in February, including over 2 MMT of wheat, 250 TMT of barley and 670 TMT of corn, according to RusAgroTrans.

They will export similar volumes this month - 2.8 MMT of grains, of which 2.0 MMT will be wheat, 150 TMT barley and 650 TMT corn.

That puts them on track to export a record 33.65 MMT of grains in 2015/16, they predict. That includes a record 24.5 MMT of wheat and a record 4.6 MMT of corn, aided by bumper 2015/16 production and the weak rouble.

The USDA currently only have Russia's wheat exports at 23.5 MMT and those of corn at 3.8 MMT.

French corn growers group AGPM said today that the country will reduce corn plantings in 2016 by 6%, partly due to increased wheat sowings in the autumn and current low prices for corn putting off growers.