EU Grains Mostly Firmer On The Day And For The Week

Posted by Nogger - a legend in his own mind at 10:02 | Categorized as

19/08/16 -- EU grains closed mostly higher on the day and for the week, with the exception of Paris wheat.

The day ended with benchmark Nov 16 GBP0.25/tonne higher at GBP132.00/tonne. Sep 16 Paris wheat traded down EUR0.75/tonne at EUR162.75/tonne, although other months were a touch firmer. Nov 16 corn was up EUR0.50/tonne at EUR166.75/tonne and Nov 16 Paris rapeseed was EUR0.25/tonne higher at EUR378.00/tonne.

On the weekly chart, London wheat added GBP1.25/tonne, Paris wheat fell EUR1.75/tonne, corn was EUR1.50/tonne firmer and rapeseed gained EUR8.50/tonne.

Despite all the doom and gloom surrounding French production this year, Paris wheat is struggling to gather much upside momentum. London wheat is getting more support from the ailing value of the pound than anything else, and rapeseed is simply following whatever Chicago soybeans do.

The latter are underpinned by strong export demand for US beans from China, and anything approaching the $10/bu mark is viewed as good value. With Brazilian supplies already very tight despite another big crop there again this year, and Argentine offers firming, the US is at an advantage to market a record crop of it's own in 2016/17. That should keep prices steady and lend support to rapeseed futures too.

Wheat supply and demand remains balanced between tightening supplies in Europe and bumper production elsewhere, not least Russia where this year's grain harvest has now reached 77.4 MMT off only 51.7% of the projected area.

That makes official estimates for a grain harvest of around 110-118 MMT look conservative. Wheat output so far this year is said to be at 53.5 MMT off 54.4% of the expected area. Again this makes official forecasts for a crop of around 69-72 MMT look low.

The Russian Ag Ministry today forecast 2016/17 total grain exports at nearly 40 MMT, eclipsing last season's record 33.9 MMT very comfortably indeed.

For now the trade is debating the viability of such numbers. Has Russia got the infrastructure to adequately store, move and ship such a volume, especially once the winter months arrive? Only time will tell.

If there are to be any supply disruptions than they could provide an opportunity for Europe, and even possibly the US to step in and make some unexpected sales.

For now EU wheat exports are running ahead of last year's pace by 24% following yesterday's release of 538 TMT worth of export licences by Brussels. A week ago though this figure was 31%. Barley exports meanwhile are down 60% year-on-year.

On the international front, Tunisia bought 50,000 MT of hard wheat in a tender. Jordan are in the market for 100,000 MT of feed barley.