Wet Weather Contiues To Rain On EU Parade

29/06/16 -- EU grains traded lower into the close Wednesday despite wet weather woes in Europe continuing to cause concern.

The day ended with Jul 16 London down GBP0.75/tonne at GBP109.00/tonne, Sep 16 Paris wheat was down EUR3.00/tonne at EUR156.75/tonne, Aug corn shed EUR0.50/tonne to EUR176.75/tonne and Aug 16 rapeseed was down EUR1.00/tonne to EUR358.50/tonne.

French analysts Agritel say that the results of the early French barley harvest confirm worries about the quality of the crop there.

The HGCA touched on the current plight of the EU barley crop, citing possible downgrades to malting barley causing an abundance of feed grade barley this year driving the differential between wheat and barley much wider levels than normal.

"The discount of UK feed barley compared with UK feed wheat for September was recently priced at £16/tonne, which is substantially more than we’ve seen this spring and the highest since last July. If concerns over the French barley crop materialise into increased proportions of feed barley relative to feed wheat supplies, this discount could grow even further," they said.

UK traders will be starting to get nervous too (especially any that tuned into Channel 4 to watch the racing from Newmarket in Saturday where the rain was so heavy only the last half furlong was visible). Could we be in for another year where there's a dearth of quality wheat available?

French wheat good to very good crop conditions have dropped 14 points in the last six weeks, and French spring barley conditions fell 10 points last week alone!

That doesn't necessarily paint a bullish picture for London feed wheat even if the outlook for the pound is lower - an abundance of cheap feed only grade wheat and barley looking for homes in 2016/17.

Another season of aggressive marketing from Russia and Ukraine isn't bullish either. Russia said that they'd already harvested more than 2 MMT of grain so far this season and early yields are up 10% at 4.36 MT/ha.

Russian analysts ProZerno said that the country would finish 2015/16 exporting 10% more grain than a year ago at 34.8 MMT, and that this figure would rise another 5.5% in 2016/17 to a record 36.7 MMT. Of that total wheat will account for over 26 MMT, they estimate.

Russia and Ukraine might ship out 2-3 MMT each of grains in July, a large proportion of which will be wheat, according to Agritel.

Tunisia are in the market tendering for 159,000 milling wheat, 109,000 MT durum and 100,000 MT of feed barley.