EU Grains End Mixed, Helped By Weak Currencies

24/06/16 -- EU grains finished mixed, and in fact mostly a bit higher despite the shock UK "leave" vote on Europe.

The day ended with Jul 16 London close up GBP4.50/tonne at GBP109.00/tonne, Sep 16 Paris wheat was up EUR1.25/tonne at EUR160.25/tonne, Aug corn was EUR10.75/tonne lower at EUR175.25/tonne and Aug 16 rapeseed was down EUR4.25/tonne to EUR352.00/tonne.

The UK referendum vote took the market by surprise, sending the pound tumbling to levels not seen since the 1980's against the US dollar and a one-year euro low also. The euro itself was weakened by the news, which may explain some of the strength displayed in Paris grains later in the day.

Some of that may also come from a continuation of the decline in French crop conditions as seen by FranceAgriMer. They cut good to very good French winter wheat ratings 4 percentage points today, down to 71% from 75% a week ago and versus 81% this time last year.

Winter barley conditions fell even more, down 6 points to 67% good to very good, and compared to 85% this time last year. Corn conditions were down 4 points to 69% (83% last year).

Few saw the UK referendum result coming, with 6/1 apparently available with the bookies for a successful "leave" vote as lat as 11pm Thursday night.

So, where do we go from here?

"Currency volatility has been a trend throughout most of this season and one of the main factors driving markets," say the HGCA. "It is likely that this volatility will continue in the short-medium term and therefore the importance of keeping an eye on markets has never been so essential," they add. Wise words.

A weak sterling, and euro, won't harm exports. These are already only 1% behind last year's record levels at 30.66 MMT for soft wheat, including the latest 556,000 MT worth added this week.

It should also help keep out cheap foreign imports of corn, spurring more consumer demand for feed wheat. At least that's the theory.

Despite having the strongest case from a fundamental supply and demand viewpoint rapeseed continues to fall, following soybeans and palm oil for now.