EU Grains Lower On The Day And For The Week

26/08/16 -- EU grains closed mostly lower. London wheat was lower on the back of a slight improvement in sterling.

At the close Nov 16 London wheat was down GBP0.95/tonne at GBP125.75/tonne, Sep 16 Paris wheat was EUR1.50/tonne lower to EUR158.50/tonne, Nov 16 Paris corn was down EUR1.25/tonne at EUR164.25/tonne, Nov 16 Paris rapeseed was EUR1.25/tonne weaker at EUR374.25/tonne.

For the week that puts London wheat GBP6.25/tonne weaker (-4.7%), Paris wheat down EUR4.25/tonne (-2.6%), corn down EUR2.50/tonne (-1.5%) and rapeseed EUR3.75/tonne (-1%) easier.

There's been some sterling strength in evidence this week, which explains why London wheat fared the worst compared with last Friday.

There's also probably the factor at play that it there's going to be a shortage of any type of wheat this season then it's going to be quality milling wheat not feed wheat.

Egypt's GASC bought 180,000 MT of Russian wheat for Sep 21-30 shipment in their tender. There's some talk that they may need to devalue the Egyptian pound, and seek financial help from the IMF as they only have sufficient cash reserves to cover 3 months of imports.

Russia's wheat harvest was placed at 70 MMT (up from 61 MMT a year ago) yesterday by the IGC. Others have it even higher. Harvesting so far (62% complete) has brought in a crop of over 60 MMT, and in excess of 16 MMT of barley.

They look like making up for the vast majority of any French shortfall this year on their own.

The IGC estimate world 2016/17 wheat production at an all time high 743 MMT, up 8 MMT from last month and 7 MMT above the previous 2015/16 record. Consumption is only seen at 732 MMT, with ending stocks rising by 12 MMT from last season to a highest ever 229 MMT.

It's particularly unfortunate for wheat that this year also brings along a record world corn crop (forecast at 1069 MMT by the IGC). Ending stocks for corn are also seen sharply higher year-on-year.

It's going to be tough to rally much from here with global stocks at such lofty levels. If you want UK wheat prices up then further sterling depreciation is your best hope, but London wheat hasn't even had that crutch to lean on this week.