EU Grains Mixed In Light Consolidation

18/10/16 -- EU grains closed mixed, with London wheat lower on consolidation from the recent rally to a near 2-year high as the pound regained a bit of composure.

At the finish Nov 16 London wheat was GBP0.75/tonne weaker at GBP135.25/tonne, Dec 16 Paris wheat was down EUR0.50/tonne at EUR163.75/tonne, Nov 16 Paris corn ended EUR0.50/tonne firmer at EUR159.25/tonne and Nov 16 Paris rapeseed was EUR0.50/tonne higher at EUR392.00/tonne.

Strong rapeseed oil prices support the Paris rapeseed market, which has now closed higher for 10 sessions on the trot.

Looking ahead, emergence of newly planted winter rapeseed crops for the 2017 harvest is also a serious issue.

"In UK terms, the weaker sterling is adding further support. At current levels, in sterling terms nearby Paris rapeseed futures are at a more than three-year high of £354.25/tonne," said the HGCA.

Sterling was higher today, causing a minor reversal in the fortunes of London wheat, following the news that UK inflation rose 1% on September, up from 0.6% in August and above analysts forecasts of a 0.9% increase.

The USDA's FAS in Europe lowered their estimate for this year's EU-28 corn crop to 60 MMT (the USDA themselves are at 60.3 MMT), although that's still up a little on 58 MMT a year ago.

They now see the EU-28 all wheat crop at 144.5 MMT versus 160 MMT a year ago. Exports were forecast at 26 MMT (down from 35 MMT) and ending stocks at 10.3 MMT (down from 13.8 MMT)

This year's wheat production shortfall comes primarily from France (-13 MMT year-on-year), Germany (-2.5 MMT) and the UK (-2.0 MMT).

Russia said that they'd exported 11.2 MMT of grains so far this season, a 5% decline on a year ago. That included 9.24 MMT of wheat (82.5% of the grain total), 1.33 MMT of barley and 577 TMT of corn.

The USDA's FAS released updated crop production forecasts for Ukraine, pegging this year's wheat harvest at 26.6 MMT versus 27.3 MMT a year ago. Barley output is seen at 9.9 MMT (8.8 MMT in 2015) and that of corn at 26.0 MMT (23.3 MMT).

Ukraine's wheat exports are forecast at 14.2 MMT (17.4 MMT), with those of barley at 5.3 MMT (4.4 MMT) and corn at 18 MMT (16.9 MMT)

The top home for Ukraine wheat is forecast to be Egypt, accounting for a 15.6% market share followed by Thailand (13%). Europe are seen accounting for 12% of total foreign wheat sales.

As far as barley goes, Saudi Arabia will take more than half (52.8%) of all Ukraine's exports.