London Wheat Falls As Pound Rises

18/08/16 -- EU grains traded mixed. London wheat gave up some of the recent gains that pushed prices to 18-month highs on the back of a slight improvement in sterling.

At the close Nov 16 London wheat was down GBP0.95/tonne at GBP131.75/tonne, Sep 16 Paris wheat was up EUR0.25/tonne to EUR163.50/tonne, Aug Paris corn was unchanged at EUR166.25/tonne, Nov 16 Paris rapeseed was down EUR2.00/tonne at EUR377.75/tonne.

The pound was firmer following much better than expected UK retail sales numbers for July.

It's worth noting that currently London wheat's fortunes are much more closely linked to the movement of the pound than fluctuations in the international wheat markets. Indeed, since the Brexit vote of the 14% gain that we have seen in Nov 16 London wheat, 11% of it is down to currency weakness (that's how much the pound is down against the euro during this time). The French wheat market has only seen a 3% gain during this period. despite the wholesale demise of their crop.

Good weather this week means that the French wheat harvest raced to 97% complete as of Monday, say FranceAgriMer. That's up from 87% a week ago and vs 99% done this tome last year.

French spring barley is 97% harvested against 78% last week and 100% last year at this time.

French corn crop condition ratings dropped 5 points in the good to very good categories to 63%.

Reuters reported that France is set to import Bulgarian wheat for the first time since the 2010/11 season, possibly to be re-exported to the US under a deal done some time ago. They are also said to be importing smaller quantities of UK wheat as well as the larger volumes of Romanian wheat already announced.

Brussels granted 538 TMT worth of soft wheat (season to date total 3.56 MMT) and 13 TMT worth of barley export licenses this past week along with 141 TMT of corn import licenses.

The HGCA/ADAS reported that the UK wheat harvest is now 40% complete with yields averaging 7.8-8.0 MT/ha. The winter barley harvest was 95% complete and winter oilseed rape harvest 90% complete, with only small areas left to harvest in northern England and Scotland, they said.

Good progress was made on the harvest of spring barley predominantly in the English regions (around 115,000 ha), bringing the harvest to 20% complete, they added.

An average UK yield of 7.9 MT/ha would produce a UK wheat crop of 14.17 MMT using official planting estimates of 1.794 million ha (16.44 MMT last year).

Ukraine said it had exported 4.85 MMT of grains so far this season, including 2.43 MMT of wheat, 444 TMT of corn and 1.90 MMT of barley. They've also exported 339 TMT of oilseeds. Good weather means that autumn/winter plantings for 2017 will increase 4% to 7.3 million ha, their Ag Ministry says. Wheat woild typically account for around 55% of the total area planted.