London Wheat Rises On Sterling Weakness

04/10/16 -- EU grains closed mostly higher, but still largely trapped in a sideways move. Nov 16 London wheat staged it's best close since Aug 22 helped by sterling weakness.

At the close Nov 16 London wheat was up GBP0.95/tonne at GBP128.70/tonne, Dec 16 Paris wheat was EUR0.25/tonne higher to EUR160.25/tonne, Nov 16 Paris corn was EUR0.50/tonne firmer at EUR160.50/tonne, Nov 16 Paris rapeseed was EUR1.25/tonne lower at EUR375.75/tonne.

The pound slumped to a 31-year low against the US dollar, and a 3-year low versus the single currency on continued worries over the implications of a "hard Brexit". That was despite the FTSE 100 soaring to near all-time highs and a string of economic data indicating that the fall-out from leaving Europe might not be anywhere near as bad as economists have been forecasting.

Still, the market is the market, and tonight one pound is worth little more than $1.27 or €1.14. The outlook for further, and possibly significant, sterling depreciation supports London wheat going forward regardless of what the rest of the grain market gets up to.

Egypt's GASC were back in the market again tendering for wheat, having relented on their zero tolerance to ergot stance. This time they picked up nine offers from seven different sellers. Russian wheat at $177.77/tonne FOB was reportedly the cheapest offer. Results of the tender are expected in the morning.

Ukraine said that their 2016 harvest was 77% done at 44.5 MMT. The ongoing corn harvest is 25% complete with a crop of 26.0-26.5 MMT expected.

The Ukraine Ag Ministry said that planting of winter OSR for the 2017 harvest has now reached 99% complete in 717.5k ha. They haven't yet reported on crop conditions/emergence which private reports suggest is an issue again this year due to drought.

French growers are also looking for rain as they begin planting winter wheat and barley, and to get newly sown winter OSR established. There's very little in the 10-day forecast.

The EU Commission estimated the 2016 EU-28 OSR crop at 19.9 MMT, down 8% on 21.6 MMT a year previously.

The Grain Association of Western Australia lowered their forecast for wheat production in Western Australia state by 0.4 MMT to 10.5 MMT, although that's still up 13.6% on last year.