EU Grains Have Dismal Day At The Office

Posted by Nogger - a legend in his own mind at 19:47 | Categorized as

08/01/14 -- EU grains closed lower across the board in what proved to be a dismal day at the office. Even the news that Brussels had issued almost 1 MMT of soft wheat export licences for the 2 weeks across the Christmas period (to Dec 31) failed to provide little in the way of support.

Jan 14 London wheat ended GBP1.50/tonne lower at GBP159.50/tonne, and Nov 14 fell GBP1.75/tonne to GBP148.75/tonne. Jan 14 Paris wheat finished dropped EUR2.25/tonne to EUR204.00/tonne, Jan 14 Paris corn fell EUR2.25/tonne to EUR172.75/tonne, whilst Feb 14 Paris rapeseed crashed EUR6.00/tonne to EUR356.50/tonne.

London wheat fell below GBP160/tonne for the first time since early October on a front month, and new crop Nov 14 slumped below GBP150/tonne for the first time ever to set a fresh contract low. Feb 14 Paris rapeseed meanwhile fell to the lowest levels for a front month since the midst of harvest-time back in August.

As well as the export numbers, the weak euro helped to minimise losses a bit for wheat across the Channel. Eurozone unemployment held at a record 12.1% in November, according to data released today. Greece (27.4%) and Spain (26.7%) hold the unenviable positions in a table that even Manchester United wouldn't wish to top. Sterling strength added to London wheat's woes.

For all the talk that fund rebalancing of wheat and corn positions in the US markets would see them in to buy significant volumes of both in the coming days, there was no sign of it heading into the close of European business, with both down heavily. This of course put EU grains under pressure, probably more pressure than was warranted, but the market is the market.

UK feed manufacturers report that business is slow, despite the time of year, depressing demand for feed grains. Supplies of cheaper low protein raw materials such as wheatfeed, soya hulls, PK expellers etc are plentiful and prices are therefore low.

There's also a mountain of cheap FSU corn kicking around, further depressing demand for feed wheat.

Ukraine exported a record 3.6 MMT of corn in both November and December, according to their Ag Ministry. They've now exported 9.5 MMT of their record corn crop since the start of the marketing year (to Dec 31) - a 46% increase on a year ago.

Friday's upcoming USDA reports are expected to peg world wheat ending stocks at an ample 182.57 MMT in 2013/14, from within a range of estimates of 181.0-184.2 MMT.

The US weather outlook is suddenly trending warmer, much warmer, allaying winterkill fears.

The weather situation in Russia and Ukraine continues to be unseasonably mild. Reports suggest that crop conditions are generally very good, and much better than a year ago, although that could change if and when a sharp freeze comes along for crops unprotected by snow.

Chinese firm JCI Intelligence cut their forecast for Chinese corn imports this season by a third from 6.6 MMT to 4.4 MMT, and far below the USDA's current 7 MMT estimate due to the ongoing dispute over non-approved GMO varieties.

Rapeseed values took a pummelling as demand remains slack due to "very high" European vegoil stocks, according to ODA.

On the international tender front, Bangladesh bought 50 TMT of wheat from Cypriot firm Midgulf at $311 C&F for Jan/Feb shipment. India's STC reportedly picked up a best bid of $282.62 in a tender to sell 160 TMT of wheat also for Jan/Feb shipment in past of the government's effort to make some room ahead of the 2014 harvest, which is thought could possibly be record large. Jordan made no purchase in their tender to buy 100 TMT of wheat, but will probably re-tender again soon as is their usual style. Iraq are in the market for 50 TMT of US, Canadian or Australian wheat.