At the close Nov 15 London wheat was GBP1.50/tonne lower at GBP110.50/tonne,
Sep 15 Paris wheat was EUR6.25/tonne easier at EUR146.75/tonne, Nov 15 Paris
corn was down EUR1.00/tonne to EUR162.25/tonne, whilst Nov 15 Paris rapeseed
was EUR1.75/tonne firmer at EUR359.25/tonne.
Friendless and soon to expire Sep 15 Paris wheat fell to levels last seen on
a front month more than 5 years ago. The gap between it and the benchmark Dec
15 contract is now almost EUR20/tonne. Based on tonight's close, converted into
sterling, it's only worth the equivalent of around GBP107/tonne!
With silos in Rouen and Dunkirk reportedly choc-full of wheat, the further
intake of which is suspended, French sellers are clamouring to make some room
after their recent record harvest.
That explains why Soufflet offered Egypt's GASC French wheat at $174.74/tonne
FOB in their latest tender today - a price that was around $2.50/tonne cheaper
than last Friday's winning Ukraine bid, and also $11/tonne below the price that
the French grain giant offered their wheat at at the time.
Even that wasn't low enough to win the business though, with Russian sellers
securing the order, albeit courtesy of cheaper freight rates, selling GASC three
cargoes of wheat at around $188/tonne including shipping - around $2/tonne less
than the price paid on Friday.
Russia's Minister of Agriculture was quoted as say that he saw no reason to
adjust the way that the current export duty on wheat is calculated. Based on
today's winning Russian bids in the GASC tender (priced at the equivalent of
around RUB12,000/tonne) there would be a duty payable of RUB450/tonne (circa
$6.50/tonne) on these sales if the rouble value holds it's current level versus
The shipping period is Oct 11-20 though, so this is far from certain especially
with the rocky ride that we've seen in crude oil values of late. The risk on
that one remains with the sellers.
Meanwhile, the 2015 Russian harvest is said to be 58.9% complete on 27.7 million
ha producing a crop of 73 MMT to date. The Ag Ministry are forecasting a final
grain crop of 100-103 MMT versus 105.3 MMT a year ao.
Wheat accounts for 49.7 MMT of what has been harvested so far off 62.5% of
the planned area. Wheat yields are said to be averaging 2.96 MT/ha versus 3.25
MT/ha a year ago.
The Kazakh havest is said to be 16.8% complete on 2.5 million ha producing
a crop of 3 MMT to date. They expect a final harvest of "not less than
17.2 MMT" which is the figure achieved a year ago.
Algeria were reported to have bought around 400,000 MT of optional origin wheat
in their latest tender. It would seem highly likely that at least some of this
will prove to be of French origin, as Algeria is a destination that offers France
a freight advantage over Black Sea material.
It was a case of another day, another piece of bearish news out of China. Today's
news was that China’s manufacturing sector contracted at the fastest rate
in three years in August.
At the close, Nov 15 London wheat was down GBP1.95/tonne to GBP112.00/tonne.
In Paris Sep 15 wheat fell EUR4.25/tonne to EUR153.00/tonne, Nov 15 corn lost
EUR3.00/tonne to EUR163.25/tonne and Nov 15 rapeseed was down EUR4.00/tonne
The gap between Sep 15 Paris wheat and the benchmark Dec 15 contract has now
widened to a cavernous EUR16/tonne ahead of the expiry of the Sep 15 contract,
which goes off the board a week tomorrow. Dec 15 will then become the new front
month, and that hit a new contract low of it's own today too, even if it is
at a large premium to the Sep 15 contract.
A record French wheat harvest this year, lack of storage space at the ports,
along with relatively slack export demand in the face of stiff Black Sea competition
are among the factors that have been keeping the nearby contract under particular
Ukraine remain their usual active selves on the export front. APK Inform said
that they'd exported 6.2 MMT of grains in the first two months of the 2015/16
marketing year, a 24% increase compared to the same period in 2014/15, and they
were no slouches then.
The ever-present Ukraine farmer eagerness to turn his crop into cash as quickly
as possible, and the weak domestic currency, mean that they will price any buying
The Ukraine Ag Ministry estimate grain production this year at 60 MMT, a more
than respectable total given all the talk earlier in the season of sharply lower
output due to heavily reduced inputs due to rising import costs - not to mention
the ongoing internal fighting going on in some parts of the agricultural belt.
The Ministry also forecast total grain exports at a record 36.4 MMT this season,
and say that the country aims to increase grain production to around 80 MMT
over the next five years. They have the land and capability to do that by adopting
more Westernised farming methods, but whether their infrastructure can handle
it is another matter. That will require heavy investment, although for now the
West, IMF et al seem happy to throw money at Ukraine with gay abandon.
The World Bank granted Ukraine a $500 million loan at the end of August, and
today said that they plan to extend that amount by another $500 million later
On harvest matters, the Ukraine Ag Ministry said that the country had completed
this year's campaign on 10.36 million ha, or 71% of the sown area, producing
a crop of 37.15 MMT to date. The corn harvest is only just getting going, with
8k ha cut so far producing a crop of 35 TMT to date. Yields thus far are only
averaging 4.36 MT/ha. The USDA have them down to average 6.59 MT/ha this year
- so that one wants monitoring.
The Ag Min also said that planting of the 2016 winter rapeseed crop is 36%
complete on 2987k ha.
Elsewhere, Belarus said that they'd harvested 8.9 MMT of grain so far this
Russia said that it's 2015 grain harvest was 58.9% complete on 27.7 million
ha producing a crop of 73 MMT so far. Wheat is 62.5% harvested on 16.8 million
ha. Production so far stands at 49.7 MMT, with yields averaging 2.96 MT/ha,
a near 9% fall compared to a year ago.
The Russian barley harvest is 69% complete on 6.2 million ha for a crop of
14.5 MMT to date. Yields there are down 6% at 2.36 MT/ha.
As with Ukraine, the 2015 Russian corn harvest is only just beginning, with
an area of 106.9k ha cut so far, which is 3.8% of the planted area. Production
stands at 520.8 TMT, with yields averaging 4.87 MT/ha, an 11% fall compared
with a year ago and below the USDA's forecast of 5.0 MT/ha.
At the finish, Nov 15 London wheat was up GBP0.30/tonne to GBP113.95/tonne,
Sep 15 Paris wheat was down EUR3.00/tonne to EUR157.25/tonne, Nov 15 Paris corn
was down EUR2.25/tonne to EUR166.25/tonne, whilst Nov 15 Paris rapeseed was
down EUR5.50/tonne to EUR361.50/tonne.
A dock workers strike at the French port of Rouen is reported to now be over,
but silo operator Senalia is still closed for the intake of wheat, although
it can at least now load vessels for export - if there's any interest that is.
That's keeping front month Sep 15 Paris wheat under pressure, which set fresh
contract lows today, and also widened the gap between it and the benchmark Dec
15 contract to almost 9%. We are also now little more than a euro away from
posting the lowest front month close on Paris wheat in 11 months.
The trade will be watching for the results of an Algerian tender for wheat,
with material from the Baltic now competing with French origin, and Ukraine
wheat also priced to sell.
Kazakhstan said that their 2015 harvest was 11.8% complete on 1.33 million
ha producing a crop of 2.32 MMT to date. Average yields are 1.33 MT/ha, which
believe it or not are up 24% on a year ago.
Ukraine seaports exported 639 TMT of grains last week, APK Inform said yesterday.
That's a better performance than Russia, who's seaports only shipped out 497
TMT of grains last week.
The leading Black Sea Russia port of Novorossiysk exported 1.2 MMT of grains
in August customs data shows, that's 17% below last year. The volume comprised
986 TMT of wheat and 221 TMT of barley. That's 30% less wheat than was shipped
out in August 2014, as the current export duty hinders sales. That's up for
review later this month though.
It was reported today that Russian wheat was in fact the cheapest offer in
the recent Iraq tender, not Australian wheat as was suggested yesterday.
Farmers in both Russia and Ukraine have begun the 2015 corn harvest, although
only small areas have been cut so far. Early Russian yields are reportedly down
more than 12% at 4.78 MT/ha. Ukraine's are even lower at 4.2 MT/ha, suggesting
that recent heat and dryness has indeed cut production potential this year.
The USDA's current yield forecasts are 5.00 MT/ha in Russia and 6.59 MT/ha
in Ukraine, although it is still very early days.
They've also begun the 2015 soybean harvest in Ukraine, with 77k ha cut so
far. Yields there are averaging 1.84 MT/ha. In addition, Ukraine growers are
said to have planted 258k ha of winter rapeseed for the 2016 harvest, around
31% of the government target.
After rising solidly for 3 sessions, rapeseed was perhaps due for a correction
and today was the day. The bad news out of China had crude oil back on the defensive,
with NYMEX and Brent both down around $3/barrel.
That hit both soybean and rapeseed prices today, with the latter giving up
some of the 7.3% gains it had managed in the past week.
At the close Sep 15 Paris wheat was EUR2.50/tonne easier at EUR160.25/tonne,
Nov 15 Paris corn was down EUR0.50tonne to EUR168.50/tonne, whilst Nov 15 Paris
rapeseed was EUR2.50/tonne firmer at EUR367.00/tonne.
For Paris wheat this was the lowest close on a front month since May 8. In
contrast, for rapeseed this was the best finish in almost 2 weeks.
The EU Commission said that the bloc finished 2014/15 exporting 33.3 MMT of
soft wheat and it's products, a 64% rise on the average for the previous 4 seasons.
France was the largest exporter, shipping out 11.7 MMT, a 5% increase on the
4-year average, followed by Germany responsible for 7.7 MMT, an 85% increase.
Romania was in third spot with 4.1 MMT and Poland in fourth with 3.3 MMT.
The top home was Algeria, taking 5.5 MMT, followed by Egypt on 4.3 MMT, Morocco
on 2.7 MMT, then Saudi Arabia and Iran each on 2.5 MMT.
For barley, EU-28 2014/15 exports jumped 80% on the recent average to 12.7
MMT. France was again the largest exporter, shipping out 4.4 MMT, with China
the largest home. Their EU barley imports jumped 1452% to 3.0 MMT. Saudi Arabia
was the second largest buyer of EU barley, importing a total of 2.6 MMT, up
30% on the recent average.
Corn exports also rose, up by 78% to 4.0 MMT, with Romania the leading seller.
Their corn exports to non-EU destinations were up 140% at 2.6 MMT. Turkey was
the leading home for EU corn, importing 0.7 MMT, followed by South Korea (0.6
MMT) and Egypt (0.4 MMT).
EU-28 wheat imports meanwhile were down 7% at 2.9 MMT. Corn imports were up
12%, despite last season's record crop, to 9.3 MMT. The leading corn supplier
was Ukraine on 5.6 MMT.
Talking of whom, their 2015/16 grain export campaign continues to go from strength
to strength. They exported 639 TMT of grains via their seaports last week, say
APK Inform. That was up from just under 629 TMT the previous week. Last week's
total included 291.5 TMT of wheat, 295.6 TMT of barley and 51.9 TMT of corn.
The top home for Ukraine grain last week was Saudi Arabia taking 76.8 TMT,
followed by Bangladesh (55 TMT) and Israel (54.6 TMT).
The latter are tendering in the market for 50 TMT of optional origin wheat
for Sep/Oct shipment. Algeria are in the market for a similar volume of optional
origin milling wheat for October shipment.
Australian wheat was said to be the cheapest offer in an Iraq tender for 50
TMT of hard wheat.
Russia's exports, in contrast to those of Ukraine, aren't going as well. They've
exported 4.5 MMT of grain so far this season, according to their Ag Ministry,
a 36.9% decrease on a year ago. At 3.27 MMT, wheat accounts for the lion's share
despite the current export duty.
At the close, Nov 15 London wheat was down GBP1.10/tonne to GBP113.65/tonne.
In Paris Sep 15 wheat fell EUR0.25/tonne to EUR162.75/tonne, Nov 15 corn also
lost EUR0.25/tonne to EUR169.00/tonne and Nov 15 rapeseed was up EUR5.75/tonne
For the week that puts London wheat GBP1.10/tonne lower, and in Paris wheat
was EUR3.50/tonne easier, corn lost EUR5.25/tonne whilst rapeseed gained EUR7.00/tonne.
In it's second tender of the week, Egypt's GASC bought one 55,000 MT cargo
of Ukraine wheat for Oct 1-10 shipment. The price paid was reported at $177.20/tonne
FOB, with a further $13.60/tonne on top for freight taking the C&F price
There were a total of 16 cargoes offered: 9 Russian; 4 French; 2 Romanian and
the one of Ukraine origin that was booked. On an FOB basis the cheapest Russian
wheat was priced at just under $182/tonne, the best French offer was at $185.74/tonne
and the best Romanian quote was $187.73/tonne.
It is interesting to see 9 Russian offers despite trade talk that sellers there
are reluctant to commit until the rouble stabilises and ahead of a possible
government decision to alter the way the current export duty on wheat is calculated.
The best Russian offer of around $182/tonne is the equivalent of around RUB11,900/tonne,
meaning that at current rates it would have incurred a tax of around $7/tonne
had it been successful, according to my calculations.
The Russian Ag Ministry said that the country's 2015 grain harvest was now
54.6% complete on 25.65 million ha - almost the exact same area as had been
harvested a year ago at this time, This year's harvest has produced a crop of
69.3 MMT so far, say the Ministry, down from 73.8 MMT this time a year ago.
Average yields are 2.70 MT/ha versus 2.87 MT/ha in 2014.
Wheat accounts for 47.7 MMT of the current total off 58% of the planned area,
and barley adds another 13.9 MMT off 65.3% of the total area sown.
The Russian corn harvest is now also just about underway at 1.3% complete and
local growers have also sown 2.3 million ha of winter crops for the 2016 harvest,
or 13.5% of the Ministry forecast.
Faced with stiff competition from the Black Sea, and indeed the Baltic too,
European exports are now starting to struggle. A bout of euro strength this
week won't have helped either. Brussels released only 277 TMT worth of soft
wheat export licences this week, down more than half on the previous week. Cumulative
export licences for the season are now 17% below where they were a year ago.
The volume of barley licences granted also fell, down 47% from the previous
week to 144 TMT.
The EU Commission today forecast total soft wheat exports this season at 27.87
MMT, a 16% drop compared with 2014/15's record.
They also cut their EU-28 corn production forecast this year to 58.7 MMT versus
a previous estimate of 65.5 MMT.
They also cut their EU-28 corn production forecast this year to 58.7 MMT versus
a previous estimate of 65.5 MMT.
FranceAgriMer raised French corn crop ratings by one point in the good to very
good category - the first increase since mid-June. These now stand at 56%, which
is 30 points less than this time last year.
The German Farm Ministry estimated the 2015 wheat crop there at 26.4 MMT, down
5% from a year ago.
Crude oil is up sharply too, and now trades closing above $42/barrel in New
Risk appetite is being boosted by the strongest jump in US equity markets since
2011 yesterday, Barclays said in a note.
At the finish, Nov 15 London wheat was up GBP0.25/tonne to GBP114.75/tonne,
Sep 15 Paris wheat was up EUR0.25/tonne to EUR163.00/tonne, Nov 15 Paris corn
was down EUR1.75/tonne to EUR169.25/tonne, whilst Nov 15 Paris rapeseed was
up EUR7.00/tonne to EUR358.75/tonne.
Defra said that there was 71% more UK wheat carried over from old crop into
the new 2015/16 marketing year at the end of June than there was a year previously.
The tonnage being carried was estimated at 2.0 MMT (excluding stocks in Scotland
and Northern Ireland), which is the largest volume since 2009.
The total also excludes intervention stocks and/or any wheat tendered on LIFFE.
Around half of that volume was still being held on farm, which is 260% more
than a year previously, they said. The largest on farm stocks were in the East
of England region, followed by the East Midlands and then Yorkshire & Humber.
The large carry that had been on offer – Nov 15 London wheat closed GBP14.25/tonne
higher than the Jul 15 contract on the day that the latter went off the board
– and a dissatisfaction with prices in general was clearly behind this.
There was also 780,000 MT of barley on hand at the end of last season, a 9%
rise on year ago levels and the largest since at least 2007.
UK corn stocks were the highest on record at 280,000 MT, and up 47% on a year
ago, they added.
Wet weather over the past week has slowed the UK harvest down, with around
55% of the combinable area now cut, up only 5 points on a week ago. The wheat
harvest has only moved on from 40% done a week ago to 45% complete this time
round, say the HGCA.
Their yield estimate is unchanged on a week ago at 8.3-8.6 MT/ha, up around
6-10% on the 10-year average. "Harvest progress remains behind the five
year average where around 60% of the UK wheat crop was harvested by this point
in August," they add.
The UK winter barley harvest is 99% done, an a quarter of the spring crop is
now in. Oats are 40% done and the winter OSR harvest is 95% complete, they say.
Yields are above the recent average on all except oats, which are in line with
the norm at 5.7 MT/ha.
News that a strike at the port of Rouen means that the Senalia facility has
suspended the loading and unloading of grains cargoes merely adds to the port's
That's keeping front month Paris wheat on the defensive - the premium on offer
for Dec 15 is more than EUR11/tonne today.
Heat and dryness in Ukraine means that their 2015 corn crop is likely to be
closer to 25 MMT than the 26-27 MMT previously expected, say Agritel. The USDA
are currently at 27 MMT, having raised that from the 26 MMT forecast in July.
APK Inform estimated the Ukraine wheat crop at 25.1 MMT in clean weight this
year, up 4% on a year ago. Consumption is forecast at 12 MMT and exports at
12.5 MMT. The USDA are currently at 25.5 MMT for production and 13 MMT for exports.
MDA CropCast cut their world wheat production forecast by 1.17 MMT to 714.5
MMT, a 3 MMT drop on a year ago due to earlier dryness in Canada. Their crop
was now pegged at 25.1 MMT, down 16% on 29.9 MMT a year ago.
They raised their outlook for the world barley crop by 0.47 MMT to 138.1 MMT,
a 2.3 MMT decline on a year ago.
They also raised their estimate for the 2015 world rapeseed/canola crop by
0.36 MMT to 63.99 MMT, down 1.6 MMT on a year ago.
Multi-year low prices for soybeans, and soybean and palm oil mean that rapeseed
"is not in control of its own price destiny right now – although
the tightness in the supply of high oil yielding oilseeds is helping stem the
fall in price. As and when prices begin to rise, especially if veg oil markets
see a change in fortune, OSR should be one of the first to respond," said
Based on the market close last night, EU rapeseed prices are down almost 12%
since the beginning of July, despite lower EU and world production this year.
The euro trades lower against both the US dollar and sterling today, giving
rise to the notion that the recent single currency appreciation might have been
a bit overdone.
The ECB desperately wants a weaker currency to stimulate Eurozone exports,
so this recent strength will be unwelcome to them.
ECB Chief Economist, Peter Praet, delivered forceful remarks yesterday that
downside risks to inflation in the Eurozone had increased, which could lead
to QE being "front-loaded" - and the last time this was hinted at
the euro took a battering.
The euro trades at under 1.13 against the US dollar today, having attained
more than 1.17 on Monday. It stands close to 1.37 versus the pound, having been
less than 1.35 on Monday.
Barclays remain bearish on the outlook for the euro, forecasting the EUR/USD
to drop below parity by the end of the year, and continuing to slide, hitting
0.93 by Q2 of 2016. They predict the GBP/EUR at 1.47 by the end of the year,
rising to 1.52 by Q2 of 2016.
At the close, Nov 15 London wheat was down GBP0.50/tonne to GBP114.50/tonne,
Sep 15 Paris wheat was EUR2.75/tonne easier at EUR162.75/tonne, Nov 15 Paris
corn was down EUR1.25/tonne to EUR171.00/tonne, whilst Nov 15 Paris rapeseed
was EUR3.00/tonne lower at EUR351.75onne.
The euro was a bit weaker today, meaning that support at the 1.36 level against
the pound held, although some analysts are now predicting that this might not
be the case for long, signalling a move down to the 1.34 area. The market appears
to have completely abandoned hope of a UK interest rate rise this year, and
is now questioning whether a Q1 of 2016 rise is even possible.
That could keep sterling under pressure for a while, which should help to underpin
London wheat a little. We shall have to see how exports perform in the coming
months to get an idea whether the harvest lows are now in, or if there's worse
to come yet. The low of the calendar year was set around August/September in
both 2013 and 2014.
The pace of Russia's wheat exports requires close monitoring, as these have
been well behind year ago levels, despite a very similar sized crop now seeming
This of course is due to the alarming slump in value of the rouble and the
current export duty (and the rouble value-based mechanism that calculates it).
Some analysts are now predicting that now that NYMEX crude has fallen below
$40/barrel, a test of $30/barrel could be on the cards. A further 25% drop in
crude would surely give the Russian currency under even more downside.
A report by APK Inform yesterday said that Russian exporters had pretty much
stopped offering wheat until the rouble finds its feet and the government clarify
possible new changes to the duty.
Rusagrotrans today said that they still expect Russia to export 3.8 MMT of
grains this month, falling to 3.2 MMT in September. They had previously predicted
August exports of 3.7-4.0 MMT versus 4.5 MMT a year ago. Exports of 3.8 MMT
seems a bit high, as that would only represent a drop of 15.5% on last year
- and August 2014 exports were an all-time high.
In other news, Algeria said that it had produced a 4 MMT grain crop this year,
up 14% on a year ago. They said that they aim to produce a crop of 6.7 MMT by
2019, reducing their reliance on imports. The North African nation will be the
world's third largest wheat importer this season, after Egypt and Indonesia,
shipping in 7.7 MMT of the grain according to USDA estimates. They are also
set to import large volumes of corn (4.4 MMT) along with 600,000 MT of barley.
Tunisia released a tender for 100,000 MT of milling wheat, 159,000 MT of durum
and 50,0000 MT of feed barley. France will be hoping to pick up at least some
of that business. Iraq are in the market for 50,000 MT of soft wheat, although
they frequently buy more than they tender for.
The fortunes of rapeseed prices seem closely tied to those of soybeans - and
the latter trades at the lowest levels since 2009. "As we know, 2015/16
rapeseed supply and demand is expected to be somewhat tighter than the situation
for soybeans, however the influence of the oilseeds complex as a whole has kept
rapeseed prices subdued," noted the HGCA.
Front month rapeseed prices closed near EUR400/tonne on Jul 1 before closing
EUR50/tonne lower than that on Monday for a decline of 12.5% in less than 2
News that China
was to cut interest rates 0.25% to 4.6% tomorrow seemed to reassure global equities
markets, with stocks in London, Paris and Frankfurt all posting decent gains.
At the close, Nov
15 London wheat was down GBP0.30/tonne to GBP115.00/tonne. In Paris Sep 15 wheat
gained EUR2.00/tonne to EUR165.50/tonne, Nov 15 corn added EUR0.25/tonne to
EUR172.25/tonne and Nov 15 rapeseed was up EUR6.00/tonne to EUR354.75/tonne.
Crude oil was higher
too today, and the recent spate of euro strength also saw a mini reversal, boosting
Paris grains a little.
APK Inform reported
that Russian shippers has all but stopped selling milling wheat onto the international
market until the rouble stabilises. The current mechanism for calculating the
cost of the export duty incurred on selling wheat abroad carries too many risks,
The Russian government
are supposed to be looking into alternative ways of calculating the duty and/or
raising the ceiling at which it kicks in. A decision on that isn't expected
for at least another couple of weeks at the earliest though.
The Russian currency
is currently falling so fast that in rouble terms domestic grain prices are
rising, they said.
As mentioned yesterday
when the sky was falling in, looking back to the last Egyptian tender where
they paid $184.39/tonne for Russian wheat on an FOB basis. At today's exchange
rate that's around RUB13,000 - well above the level at which the duty kicks
in, and in fact RUB1,000 more than the equivalent when the deal was done.
The higher the
price paid in rouble terms, the larger the export duty due. According to my
calculations, when the last deal was done the duty payable was around $7.50/tonne,
today it would be around $14/tonne - almost double.
So the duty payable
has doubled in little more than a week, and the consignment that was sold still
won't be shipped until the end of September. The risk on what the rouble might
do between now and then could be hedged, but the possible value of the export
duty can't really.
Hence the slowdown
in Russian sales. Of course this doesn't mean that the wheat isn't out there
to sell, it just isn't really coming onto the market yet. As, when and if the
Russian government does change the mechanism then that could change. They are
still confidently predicting a 59.8 MMT wheat crop this year.
The 2015 Russian
wheat harvest is now past halfway done, and yields so far are down more than
9% at 3.15 MT/ha - only about 54% of the European average predicted by MARS
That's a pipe dream
for a Kazakhstan farmer though, average yields these this year are only 1.51
MT/ha. Amazingly, this is up by almost a third on a year ago!
News that China was to cut interest rates 0.25% to 4.6% tomorrow seemed to
reassure global equities markets, with stocks in London, Paris and Frankfurt
all posting decent gains.
At the close, Nov 15 London wheat was down GBP0.30/tonne to GBP115.00/tonne.
In Paris Sep 15 wheat gained EUR2.00/tonne to EUR165.50/tonne, Nov 15 corn added
EUR0.25/tonne to EUR172.25/tonne and Nov 15 rapeseed was up EUR6.00/tonne to
Crude oil was higher too today, and the recent spate of euro strength also
saw a mini reversal, boosting Paris grains a little.
APK Inform reported that Russian shippers has all but stopped selling milling
wheat onto the international market until the rouble stabilises. The current
mechanism for calculating the cost of the export duty incurred on selling wheat
abroad carries too many risks, they said.
The Russian government are supposed to be looking into alternative ways of
calculating the duty and/or raising the ceiling at which it kicks in. A decision
on that isn't expected for at least another couple of weeks at the earliest
The Russian currency is currently falling so fast that in rouble terms domestic
grain prices are rising, they said.
As mentioned yesterday when the sky was falling in, looking back to the last
Egyptian tender where they paid $184.39/tonne for Russian wheat on an FOB basis.
At today's exchange rate that's around RUB13,000 - well above the level at which
the duty kicks in, and in fact RUB1,000 more than the equivalent when the deal
The higher the price paid in rouble terms, the larger the export duty due.
According to my calculations, when the last deal was done the duty payable was
around $7.50/tonne, today it would be around $14/tonne - almost double.
So the duty payable has doubled in little more than a week, and the consignment
that was sold still won't be shipped until the end of September. The risk on
what the rouble might do between now and then could be hedged, but the possible
value of the export duty can't really.
Hence the slowdown in Russian sales. Of course this doesn't mean that the wheat
isn't out there to sell, it just isn't really coming onto the market yet. As,
when and if the Russian government does change the mechanism then that could
change. They are still confidently predicting a 59.8 MMT wheat crop this year.
The 2015 Russian wheat harvest is now past halfway done, and yields so far
are down more than 9% at 3.15 MT/ha - only about 54% of the European average
predicted by MARS yesterday.
That's a pipe dream for a Kazakhstan farmer though, average yields these this
year are only 1.51 MT/ha. Amazingly, this is up by almost a third on a year
Rapeseed remained well into the red, even if it was also well off session lows,
under the influence of soybeans trading at prices not seen in years. They it
would seem stand to lose the most from China catching a cold, they do after
all account for two thirds of all global soybean trade.
At the close, Nov 15 London wheat was up GBP0.55/tonne to GBP115.30/tonne,
Sep 15 Paris wheat was EUR3.25/tonne easier at EUR163.50/tonne, Nov 15 Paris
corn was down EUR2.25/tonne to EUR172.00/tonne, whilst Nov 15 Paris rapeseed
had slumped EUR8.75/tonne lower to EUR348.75/tonne. At one stage the front month
rapeseed contract hit as low as EUR339.50/tonne to stand EUR18.00/tonne lower
on the day.
London wheat came off the best due to the suddenly sharply firmer euro, against
which the pound finished the day at 1.36, it's lowest since Jun 8.
Euro strength was tied to ideas that the Fed and BoE will now be delaying plans
to start raising US and UK interest rates any time soon, faced with the Chinese-led
global economic malaise. When China sneezes the rest of the world does indeed
catch a cold it would seem.
The EU Commission's MARS unit released their August report, in which they said
"Large areas of Europe have been negatively impacted by high temperatures
and dry conditions, hitting summer crops during their most critical grain-filling
They subsequently cut their forecast for EU-28 corn yields this year from the
6.71 MT/ha estimated a month ago to an average 6.40 MT/ha. That's 20% down on
a year ago and almost 9% below the recent 5-year average.
Wheat yields were raised from 5.80 MT/ha to 5.81 MT/ha, which is 2.5% above
the 5-year average. They've also increased winter barley yields to an average
5.61 MT/ha, which is 4.7% above the 5-year average. OSR yields were raised to
3.25 MT/ha, which is 3.8% above the 5-year average.
In the UK, they estimated average wheat yields at 8.09 MT/ha, up slightly on
8.07 MT/ha a month ago, although lower than the HGCA's current figure of 8.3-8.6
MT/ha. "First reports suggest good yields and quality, despite the fact
that frequent rains hampered the harvest in Ireland and the northern UK,"
Average UK barley yields were trimmed from 6.09 MT/ha a month ago to 6.05 MT/ha,
which is well below the HGCA's current figures. OSR yields here in the UK were
estimated at 3.73 MT/ha, unchanged on a month ago and in line with current HGCA
FranceAgriMer said that 12% of this year's French wheat crop had protein levels
of over 11.5%, a further 34% of the crop had proteins of between 11-11.5%, and
another 40% was in the 10.5-11.0% region.
They said that 40% of the crop had a bushel weight of over 80kg/hl, with 91%
of the crop over 78kg/hl, and that 96% had hagberg levels of over 240. That's
a better and more consistent quality than last year.
The Russian Ag Ministry said that the 2015 harvest there was now halfway through,
producing a total grain crop of 65 MMT to date. That includes 45.7 MMT of wheat
and 12.7 MMT of barley. They estimate final grain production this year at 102.9
MMT, including 59.8 MMT of wheat, 17.4 MMT of barley and 13 MMT of corn.
Winter plantings for the 2016 harvest in Russia are already said to be 7.3%
Russia's 2015/16 total grain exports (to Aug 19) were 3.8 MMT, according to
Ministry data. That's 35% down compared to the same period a year ago. Exporters
will be hoping that they can convince the government to raise the current export
duty ceiling on wheat from the RUB11,000/tonne level at which it currently kicks
in given recent rouble weakness.