EU Grains Lower On Currency, US Markets, Russia

Posted by Nogger - a legend in his own mind at 10:08 | Categorized as

06/09/16 -- EU grains closed mostly lower to start the week, with London wheat under pressure from a resurgent sterling.

The day ended with Nov 16 London wheat down GBP0.75/tonne at GBP120.25/tonne, Sep 16 Paris wheat was down EUR2.50/tonne at EUR152.00/tonne, Nov 16 corn fell EUR1.50/tonne to EUR161.00/tonne and Nov 16 Paris rapeseed was down EUR1.75/tonne to EUR377.75/tonne.

This was a new 2-month low for Nov 16 London wheat. This is due to a combination of recent sterling strength, US markets hitting 10-year lows and bumper Russian production.

The 2016 grain harvest in the latter now stands at 95.6 MMT off 73% of the planned area. Wheat accounts for 66.3 MMT of that off 77.1% of plan and barley a further 17.4 MMT (87.1%).

Russian exports so far this season (Jul 1 to Aug 31) stand at 5.366 MMMT, of which 4.49 MMT is wheat and 797 TMT barley.

Plantings for 2017 in Russia are now at 4.4 million ha, around 25% of the government forecast.

US wheat futures in both Chicago and Kansas hit 10 year lows last week on bumper production and the strong US dollar weighing on exports.

The pound meanwhile closed at it's best levels against the US dollar since Jun 29 tonight following better than expected post-Brexit economic data.

All this is weighing on London wheat, together with a little bit of harvest pressure (especially given the large carryover stocks from last year).

In other news, the Ukraine Oilseeds Association estimated rapeseed production there this year at only 1.1 MMT (down 31% from 1.6 MMT a year ago) after dry weather cut plantings last autumn.

Romania currently tops the EU wheat export table with 1.215 MMT, closely followed by normal leader France (1.175 MMT), according to EU data.