EU Grains Rise, Helped By US Dollar Rising To New Highs

Posted by Nogger - a legend in his own mind at 21:50 | Categorized as

11/03/15 -- EU grains closed higher, spurred on by steadier US markets and another bout of dollar strength.

At the finish, Mar 15 London wheat was GBP1.45/tonne firmer at GBP117.90/tonne, May 15 Paris wheat was up EUR2.00/tonne at EUR188.00/tonne, Jun 15 Paris corn rose EUR3.25/tonne to EUR165.25/tonne and May 15 Paris rapeseed climbed EUR5.25/tonne higher to EUR371.00/tonne.

The pound crashed below 1.50 versus the US dollar, to hit its lowest levels since July 2013. The euro meanwhile took an absolute pasting, slumping to a new more than 7-year low against the pound, and levels not seen versus the dollar in 12 years. Some are now suggesting that euro parity with the US currency could be tested soon.

All that bodes well for EU wheat exports to continue apace, these are of course already running at levels better even than last season, which went on to be a record.

Before the market gets too cocky though, it needs to be remembered that crop prospects in Europe this year are generally looking pretty good. Although wheat production is seen down, according to the latest estimate from the EU Commission, ending stocks next season are forecast at a 10-year high 19.5 MMT - up 40% on this year.

The Commission also forecast another bumper EU barley crop in 2015/16, along with rising ending stocks for that too.

"France, the top EU wheat producing country, has experienced much cooler conditions 2-4 F below average for the past several weeks. Temperatures a year ago were 4-5 F warmer. As wheat is a 'cool season' crop, wheat potential this season is deemed better," said Martell Crop Projections. This is backed up by the latest crop condition ratings from FranceAgriMer showing wheat rated 91% good to very good,far higher than 74% this time a year ago. Winter barley ratings were pegged at 90% good to very good, up from 72% a year ago.

"Indeed, all of Europe has experienced cooler temperatures this season, confirmed by a comparison of temperatures in the 45 days up to March 10. Germany, Europe’s second leading wheat nation, one year ago was in the throes of a serious drought. Precipitation has been relatively heavier this winter, which is more favourable for wheat, although one or two stubborn dry pockets have continued in eastern Germany," they added.

In other news, Rusagrotrans said that Russia would export around 1 MMT of grains this month, down from 1.23 MMT in February.

Barley exports would unusually outstrip those of wheat at 400 TMT, which is 50 TMT more than the latter grain, they said.

The Russian Ministry are a bit more bullish on grain exports, predicting that the country will still ship out 5 MMT more between now and the end of the current marketing year at the end of June. That would take this season's exports to around 30 MMT.

The Ministry also said that there were currently no plans to alter the export duty situation on wheat, nor to bring corn or barley into the equation.