EU Reports
31-07-2014 19:29 PM | EU Reports
31/07/14 -- EU grains closed mostly lower with Nov 14 London wheat down GBP2.50/tonne at GBP122.10/tonne, Nov 14 Paris wheat was down EUR5.00/tonne to EUR170.50/tonne, Aug 14 Paris corn fell EUR0.75/tonne to EUR162.75/tonne and Aug 14 Paris rapeseed rose EUR7.75/tonne to EUR325.00/tonne.

For both London and Paris wheat these were new 4-year lows.

The HGCA said that the UK grain harvest was already around 20% complete, double the norm for the end of July.

"Harvesting of winter barley and winter oilseed rape is nearing completion in the southern half of England and has started further North and into Scotland and Wales. Harvesting has commenced in Southern regions on wheat, spring barley and some oats," they said.

Nationally they said that the winter OSR harvest was now 75% done, along with 85% of the winter barley crop. Yields of the latter were described as "well above average".

"Winter barley yields are good, averaging 7.2-7.4 MT/ha, whilst winter oilseed rape yields are averaging 3.4-3.6 MT/ha," they reported.

It's still too early to suggest where winter wheat yields will end up. "There has been a great deal of variability in the early yields with some of the lightest land in the Eastern region yielding just 4.5 MT/ha, whilst heavier land in the same region is yielding 9.0-9.6 MT/ha. In the West Midlands and Yorkshire and Humber, some of the best crops have yielded up to 11-12 MT/ha," they added.

"Early quality data for milling wheat is showing some high Hagberg falling numbers," they said. That could be good news for milling wheat growers, with France (and possibly others too) said to be suffering problems with low Hagberg levels this year.

Note though that there is no sign of a minimum Hagberg level within the terms of the Paris milling wheat contract.

As was widely expected, there was no eleventh hour deal or last minute reprieve, Argentina defaulted on it's debt to the "hedge fund vultures" early this morning. The trade is still wondering what this means for global trade in wheat, corn and soybeans.

Argentina are expected to be the world's 7th largest exporter of wheat in 2014/15, and the 3rd largest for both corn and soybeans. They are also the biggest global exporter of soymeal, set to ship a larger volume than the US and Brazil combined in 2014/15, according to the latest projections from the USDA.

The trade is also considering the possible ramifications of an intensifying of Western sanctions against Russian banks, and how that might possibly disrupt global trade in wheat in particular. Russia are forecast to be the world's joint fourth largest wheat exported in 2014/15.

Certainly they look like having plenty of wheat to sell this year. The 2014 Russian wheat harvest is 41.3% complete, already producing a crop of 38 MMT with average yields up 19.8% at 3.63 MT/ha.

MDA CropCast today raised their forecast for the Russian 2014 wheat crop by 1.2 MMT from last week, saying that drier weather will favour winter wheat drydown and harvesting. Spring wheat growth will be finishing up, they also noted.

31-07-2014 19:29 PM | EU Reports
31/07/14 -- EU grains closed mostly lower with Nov 14 London wheat down GBP2.50/tonne at GBP122.10/tonne, Nov 14 Paris wheat was down EUR5.00/tonne to EUR170.50/tonne, Aug 14 Paris corn fell EUR0.75/tonne to EUR162.75/tonne and Aug 14 Paris rapeseed rose EUR7.75/tonne to EUR325.00/tonne.

For both London and Paris wheat these were new 4-year lows.

The HGCA said that the UK grain harvest was already around 20% complete, double the norm for the end of July.

"Harvesting of winter barley and winter oilseed rape is nearing completion in the southern half of England and has started further North and into Scotland and Wales. Harvesting has commenced in Southern regions on wheat, spring barley and some oats," they said.

Nationally they said that the winter OSR harvest was now 75% done, along with 85% of the winter barley crop. Yields of the latter were described as "well above average".

"Winter barley yields are good, averaging 7.2-7.4 MT/ha, whilst winter oilseed rape yields are averaging 3.4-3.6 MT/ha," they reported.

It's still too early to suggest where winter wheat yields will end up. "There has been a great deal of variability in the early yields with some of the lightest land in the Eastern region yielding just 4.5 MT/ha, whilst heavier land in the same region is yielding 9.0-9.6 MT/ha. In the West Midlands and Yorkshire and Humber, some of the best crops have yielded up to 11-12 MT/ha," they added.

"Early quality data for milling wheat is showing some high Hagberg falling numbers," they said. That could be good news for milling wheat growers, with France (and possibly others too) said to be suffering problems with low Hagberg levels this year.

Note though that there is no sign of a minimum Hagberg level within the terms of the Paris milling wheat contract.

As was widely expected, there was no eleventh hour deal or last minute reprieve, Argentina defaulted on it's debt to the "hedge fund vultures" early this morning. The trade is still wondering what this means for global trade in wheat, corn and soybeans.

Argentina are expected to be the world's 7th largest exporter of wheat in 2014/15, and the 3rd largest for both corn and soybeans. They are also the biggest global exporter of soymeal, set to ship a larger volume than the US and Brazil combined in 2014/15, according to the latest projections from the USDA.

The trade is also considering the possible ramifications of an intensifying of Western sanctions against Russian banks, and how that might possibly disrupt global trade in wheat in particular. Russia are forecast to be the world's joint fourth largest wheat exported in 2014/15.

Certainly they look like having plenty of wheat to sell this year. The 2014 Russian wheat harvest is 41.3% complete, already producing a crop of 38 MMT with average yields up 19.8% at 3.63 MT/ha.

MDA CropCast today raised their forecast for the Russian 2014 wheat crop by 1.2 MMT from last week, saying that drier weather will favour winter wheat drydown and harvesting. Spring wheat growth will be finishing up, they also noted.

31-07-2014 08:19 AM | EU Reports
30/07/14 -- EU grains managed a mostly higher close at the end of a mixed two-sided trading session. We can probably attribute this to light consolidation/profit taking following the recent slump to 4-year lows.

The day finished with Nov 14 London wheat up GBP0.65/tonne at GBP124.60tonne, Nov 14 Paris wheat ended EUR0.50/tonne firmer at EUR175.50/tonne, Aug 14 Paris corn was up EUR1.00/tonne at EUR163.00/tonne, whilst Aug 14 Paris rapeseed fell EUR2.25/tonne to EUR317.25/tonne.

The German Farmers Association, DBV, said that the winter barley harvest there was almost complete, forecasting good yields of 7.3 MT/ha versus 6.9 MT/ha last year. They see production in 2014 at 9 MMT.

German winter OSR yields were estimated at 4.1 MT/ha, producing a crop of 5.8 MMT. The harvest is more than 66% complete, they said.

They also commented that early winter wheat yields vary "very strongly" and that the 2014 harvest is held up by repeated rains, without giving a production forecast.

Ukraine said that it's Jul 1-29 grain exports were 1.757 MMT, including 558 TMT of wheat, 896 TMT of barley and 286 TMT of corn. There's a further 332 TMT of grain loaded onto vessels waiting to sail, they added.

Belarus said that they are 42.9% through their 2014 grain harvest, which is expected/hoped to produce a record crop of 10 MMT.

Russia said that they'd harvested 45.4 MMT of grains off 28.4% of the planned area, including 37.2 MMT of wheat and 4.4 MMT of barley. Grain yields so far are said to be up 23% at 3.43 MT/ha.

The USDA attaché in Russia estimated the 2014/15 total grain crop at 94.0 MMT (excluding Crimea which could add a further 1.2 MMT to that total) versus a previous estimate of 92.0 MMT. That includes 52 MMT of wheat, 16 MMT of barley, 13 MMT of corn.

The attaché estimated Russia's 2014/15 grain exports at 26.0 MMT.

Meteorolgix Weather said Europe’s weather forecast calls for generally warmer and drier weather next week, which will be favourable for harvesting.

The US were said to have imposed extra sanctions on three Russian banks. These are the VTB Bank, the Bank of Moscow and the Russian Agricultural Bank. It's not clear at this stage how that will impact, if at all, on Russia's grain business in the year ahead.

Egypt's GASC were said to have bought 175 TMT of exclusively Russian milling wheat for September shipment in their tender today at a little over $260/tonne C&F.

Ukraine feed wheat is said to be offered in the market at $205/tonne FOB for Aug/Sep shipment, which is around GBP120.50/tonne.

30-07-2014 08:59 AM | EU Reports
29/07/14 -- EU wheat futures slumped to fresh 4-year lows on harvest pressure and rising production estimates coming out of Russia and Ukraine.

The day ended with new crop Nov 14 London wheat closing GBP1.55/tonne lower at GBP123.95/tonne, Nov 14 Paris wheat was EUR3.25/tonne weaker at EUR175.00/tonne, Aug 14 Paris corn was up EUR2.25/tonne to EUR162.00/tonne (although new crop months were mostly lower) and Aug 14 Paris rapeseed fell EUR0.50/tonne to EUR319.50/tonne.

UkrAgroConsult raised their forecast for the Ukraine 2014 grain crop to 57.4 MMT, a 4% increase on their previous estimate. The increase was largely due to the better than anticipated yields being achieved this year, they said.

They now see 2014/15 Ukraine grain exports at 31.7 MMT, a 2 MMT hike on their previous estimate. That includes wheat exports of 9.5 MMT versus a previous estimate of 9.0 MMT and up compared to 2013/14 exports of 9.2 MMT.

The Ukraine analyst also raised their outlook on corn production and exports in 2014/15 to identical levels to the records set in 2013/14.

The Ukraine Ministry said that the early grains harvest, which excludes corn, had been completed on 7.1 million ha, producing a crop of 23.6 MMT to date. That total includes 16.3 MMT of wheat and 6.8 MMT of barley. Yields thus far are averaging 3.33 MT/ha, up nearly 10% on a year ago.

IKAR yesterday estimated Russia’s 2014 wheat crop at 57.5 MMT versus a previous estimate of 56.3 MMT.

The Russian Ministry said that this year's grain harvest was 27.2% complete at 43.6 MMT, with yields averaging 3.44 MT/ha, a sharp rise of more than 23% on a year ago. The total includes 35.9 MMT of wheat off 38.9% of the planned area, with yields at 3.64 MT/ha, a 20% increase on this time last year. Barley adds a further 3.8 MMT, with yields at 3.05 MT/ha, up 33% on a year ago.

Morocco are said to be planning to lower their import duty on wheat from Sept 1, in a moved that seems to be linked to quality concerns over French wheat which could allow more grain into the country from the Black Sea.

Egypt announced a late tender for wheat for September shipment with the results expected tomorrow. Russia, Romania and Ukraine wheat all scored successes in the last GASC tender.

China is said to be buying large volumes of cheap foreign barley for import, to supplement it's virtual embargo on US DDGs. They've already taken more French barley this month than they did in the whole of 2013/14.

29-07-2014 08:59 AM | EU Reports
28/07/14 -- EU grains closed mixed with Nov 14 London GBP0.80/tonne lower at GBP125.50/tonne, Nov 14 Paris wheat was down EUR1.50/tonne to EUR178.25/tonn, Aug 14 Paris corn was up EUR3.50/tonne at EUR159.75/tonne and Aug 14 Paris rapeseed rose EUR2.25/tonne to EUR320.00/tonne.

Trading was subdued, with many buyers absent for the Eid al-Fitr holiday, an Islamic celebration that marks the end of the month-long Ramadan

There's still widespread trade talk of hagberg problems with the French crop.

Traditional export homes for French wheat like Algeria, Morocco and Egypt all carry minimum requirements for hagbergs of at least 200 if not higher, which potentially gives French traders a large headache this year. It could also provides UK milling wheat with a nice little window of opportunity.

For UK feed wheat it's a different story, with French origin grain seen undercutting the market in anticipation of a glut coming onto the market. French feed wheat apparently traded into Ireland last week at EUR10/tonne under offers from the UK, according to Agrimoney.

UK milling wheat will have still have to compete with the Black Sea for export business too, and Russia's crop at least seems to be getting larger. IKAR today raised their estimate for the wheat crop there to 57.5 MMT versus a previous forecast of 56.3 MMT. That's considerably higher than the USDA's current 53 MMT forecast and 5.5 MMT more than last year's production.

Russia's Ag Ministry said that as of July 25th Russia had harvested 33.2 MMT of wheat (of 36% of the total planned area) with an average yield of 3.66 MT/ha, up more than 20% on a year ago. They are also said to have exported 1.6 MMT of wheat already this month.

In excess of 80% of the Russian wheat harvest is currently said to be of milling standard.

Russian 12.5% milling wheat FOB the Black Sea is currently offered in the market around $240-242/tonne FOB, which is the equivalent of around GBP142/tonne.

29-07-2014 08:49 AM | EU Reports
28/07/14 -- EU grains closed mixed with Nov 14 London GBP0.80/tonne lower at GBP125.50/tonne, Nov 14 Paris wheat was down EUR1.50/tonne to EUR178.25/tonn, Aug 14 Paris corn was up EUR3.50/tonne at EUR159.75/tonne and Aug 14 Paris rapeseed rose EUR2.25/tonne to EUR320.00/tonne.

Trading was subdued, with many buyers absent for the Eid al-Fitr holiday, an Islamic celebration that marks the end of the month-long Ramadan

Given all the talk of hagberg problems with the French crop it may be surprising to see the Paris market close lower. However, on closer inspection, the quality clauses within the Paris milling wheat contract don't appear to stipulate any requirement for minimum hagberg levels.

Traditional export homes for French wheat like Algeria, Morocco and Egypt all carry minimum requirements for hagbergs of at least 200 if not higher, which potentially gives French traders a large headache this year. It could also provides UK milling wheat with a nice little window of opportunity.

For UK feed wheat it's a different story, with French origin grain seen undercutting the market in anticipation of a glut coming onto the market. French feed wheat apparently traded into Ireland last week at EUR10/tonne under offers from the UK, according to Agrimoney.

UK milling wheat will have still have to compete with the Black Sea for export business too, and Russia's crop at least seems to be getting larger. IKAR today raised their estimate for the wheat crop there to 57.5 MMT versus a previous forecast of 56.3 MMT. That's considerably higher than the USDA's current 53 MMT forecast and 5.5 MMT more than last year's production.

Russia's Ag Ministry said that as of July 25th Russia had harvested 33.2 MMT of wheat (of 36% of the total planned area) with an average yield of 3.66 MT/ha, up more than 20% on a year ago. They are also said to have exported 1.6 MMT of wheat already this month.

In excess of 80% of the Russian wheat harvest is currently said to be of milling standard.

Russian 12.5% milling wheat FOB the Black Sea is currently offered in the market around $240-242/tonne FOB, which is the equivalent of around GBP142/tonne.

27-07-2014 15:39 PM | EU Reports
25/07/14 -- EU grains markets closed lower on the day, although mixed on the week.

The day finished with Nov 14 London wheat down GBP1.45/tonne at GBP126.30tonne, Nov 14 Paris wheat ended EUR1.25/tonne easier at EUR179.75/tonne, Aug 14 Paris corn was down EUR2.50/tonne at EUR156.25/tonne, whilst Aug 14 Paris rapeseed fell EUR1.50/tonne to EUR317.75/tonne.

For the week that puts London wheat GBP2.70/tonne lower and Paris corn EUR10.50 easier. Paris wheat did however manage a small rise of half a euro, as too did Paris rapeseed. Quality problems with the respective harvests of the latter two have supported prices for those this week.

Reuters reported that although protein levels are said to be OK, large proportions of this year's French wheat crop has Hagberg levels of 160 or less, rendering it virtually useless as milling wheat, and certainly not up to the standard wanted by traditional North African homes for French wheat.

FranceAgriMer reported that the French winter wheat harvest had advanced to 44% done as of last Monday, up from only 5% complete a week previously.

Reuters also reported that France had already exported, or was currently loading, 262 TMT of barley for China in July so far. That's more than their previous 5 year average annual barley exports to the Far Eastern buyer of 180 TMT per annum.

The Ukraine Ag Ministry reported the early grains harvest there at 64% complete at 20.526 MMT, with average yields at 3.26 MT/ha versus 2.99 MT/ha a year ago. Wheat accounts for over 14 MMT of that total, with barley production contributing almost 6 MMT more.

The Ukraine Ag Minister said that around half a million tonnes of this year's grain crop could be lost due to the ongoing conflict in the east of the country.

The Russian Ag Ministry said that the 2014 grain harvest there was almost 23% complete at 37.2 MMT, with yields averaging 3.48 MT/ha versus only 2.84 MT/ha this time last year. Wheat accounts for 31.4 MMT of that total off nearly 34% of the planned area.

Brussels confirmed yesterday that they'd issued 262 TMT of soft wheat export licences this past week, taking the 2014/15 marketing year total so far to 763 TMT. They also granted 220 TMT worth of barley exports, taking the seasonal total to date to 789 TMT. In addition they also issued 247 TMT of corn import licences, which takes the 2014/15 total so far to 891 TMT.

Separately, the EU approved 40,557 MT worth of Ukraine wheat imports under the existing preferential duty free tariff agreement, along with allowing 30,000 MT of corn and 10,400 MT of barley into the bloc from the same country.

Turkey bought 165 TMT of milling wheat and 65 TMT of feed barley, both of optional origin for Aug/Sep shipment.

European Commission estimated EU 28 2014 soft wheat crop at 137.5 MMT, unchanged from their previous estimate and up 1.9% from 2013. They also estimated the EU 28 2014 barley crop at 55.9 MMT, up from a previous estimate of 55.3 MMT, although down 5.9% from 2013.

25-07-2014 10:09 AM | EU Reports
24/07/14 -- EU grains closed mixed, but mostly higher. Paris wheat has now finished higher for three sessions in a row, it's been a while since we've been able to say that.

The day ended with new crop Nov 14 London wheat closing GBP0.15/tonne firmer at GBP127.75/tonne, Nov 14 Paris wheat was EUR1.50/tonne higher at EUR181.00/tonne, Aug 14 Paris corn was up EUR1.00/tonne to EUR158.75/tonne and Aug 14 Paris rapeseed fell EUR2.50/tonne to EUR319.25/tonne.

French, and possibly German, quality downgrades are what's been supporting the wheat market this week. FranceAgriMer will update us with some harvest progress figures tomorrow, but as far as some hard facts on quality are concerned we remain stuck with only anecdotal reports for the time being.

"Wet conditions experienced in recent weeks have certainly degraded lots of common wheat and durum wheat, with some crops sprouting and with very low Hagberg falling numbers," is the best translation I can offer you from one leading French agricultural website.

Closer to home, the HGCA estimated that the UK winter barley harvest is around 35% done, with the winter OSR crop in the region of 45% cut, along with the first few bits on winter wheat.

In southern counties as much as 80% of the winter barley and rapeseed crops have already been harvested, they said.

OSR yields are above average, although perhaps lower than farmer expectations, and range anywhere from 2.2-5.2 MT/ha, with the high end coming from "virgin" OSR land, they reported. Oil content is generally in the 42-46% range, they added.

Winter barley yields are "promising" with a tentative early forecast on national yields being around 7.0-7.2 MT/ha, they said. That's considerably higher than the 6.49 MT/ha forecast by the EU Commission's MARS unit earlier in the week.

Impressive early grain yields meanwhile keep getting reported out of Russia. The Stavropol region is already said to be 90% harvested, producing a crop of 7.27 MMT so far, with yields up 25.6% on last year at 3.87 MT/ha and with 83% of the wheat harvested making milling standard. The Rostov region is 73% harvested at 6.5 MMT (including 5.8 MMT of wheat), and yields here are said to be 45% up on a year ago at 3.2 MT/ha.

On a national level, the Russian Ministry said that 22% of the planned area has been harvested producing a crop of 35.6 MMT to date, with yields at 3.47 MT/ha, a 20.5% hike on last year. Wheat accounts for 29.2 MMT of that total, off 32% of the planned area, with yields up 17.6% at 3.6 MT/ha.

Egypt's GASC paid around $256.60/tonne for a combo of Russian/Romanian and Ukraine 12.5% milling wheat yesterday, that's a touch under GBP151/tonne including shipping and handling costs.

Russian/Ukraine feed wheat FOB the Black Sea is said to be offered around $198/tonne, which is in the region of GBP116.50/tonne. Romanian feed wheat CIF Spain is said to be offered at EUR163/tonne, which is less than GBP130/tonne including freight. Ukraine new crop corn offers meanwhile have now slid to around $185-187/tonne, which is below GBP110/tonne on an FOB basis.

24-07-2014 08:49 AM | EU Reports
23/07/14 -- EU grains closed mixed with Nov 14 London GBP0.05/tonne lower at GBP127.60/tonne, Nov 14 Paris wheat was up EUR1.50/tonne to EUR179.50/tonne - although just failing to stay above the important EUR180/tonne level. Aug 14 Paris corn was down EUR2.50/tonne at EUR157.75/tonne and Aug 14 Paris rapeseed jumped EUR7.00/tonne to EUR321.75/tonne.

Continued talk of widespread problems with the quality of this year's French wheat harvest supported the Paris market today. The wetness that is causing the problems for wheat is viewed as beneficial for corn however, and it also potentially means that there will be more feed wheat on the market in 2014/15, in direct competition to corn.

Could the London and Paris wheat markets go in opposite directions? In dollar terms tonight's close puts the spread between the two Nov 14 contracts at around $24/tonne. That's the largest differential since May 2013. However "back in the oft-cited year of poor quality of 2007 we saw the spread between the two jump to $60/tonne, so we’re not seeing anything historic just yet," says my Twitter chum Tregg Cronin at Halo Commodities in the US.

"The currency influence and the lighter volume can make these spreads volatile, but the Paris Wheat/UK wheat spread is worth paying attention to," he notes. It may also be worth keeping an eye on the wheat/corn spread too.

Reuters report a French exporter this week buying Polish milling wheat to cover existing sales that they would have expected to fulfil with French material. French traders have also been said to be seeking/buying German wheat this week.

Egypt's GASC bought 235 TMT of Russian, Romanian and Ukraine wheat in their tender for Sep 1-10 shipment. The prices paid were said to be around $256.60 C&F, that's down from around $260-261 C&F paid for Romanian wheat for late August shipment a fortnight ago. Some might see the fact that there were no French offers made as being significant.

Jordan passed on a tender to purchase 100 TMT of optional origin hard milling wheat and immediately re-tendered for the same, in their usual way. Iran is said to be looking for 50 TMT of Black Sea wheat for prompt shipment.

Russia's 2014 grain harvest is now 20.8% complete, producing a crop of 33.6 MMT to date, with average yields of 3.47 MT/ha, an 18.8% increase on this time last year. Wheat accounts for 28 MMT of that total off 30.7% of the planned area. Wheat yields are averaging 3.6 MT/ha versus 3.1 MT/ha a year ago, say the Ag Ministry.

The Ukraine early grains harvest (which excludes corn) meanwhile is already 60% complete producing a crop of 19.1 MMT. Yields are averaging 3.22 MT/ha, up more than 9% on a year ago. Wheat accounts for 13.1 MMT of that total with yields at 3.49 MT/ha. The Ukraine Ministry say that 63% of the wheat harvested so far is of milling standard (versus around 70% a year ago).

The French rapeseed harvest has progressed to the north east of the country, and yields so far are disappointing and seed sizes are small. Wet weather in Germany means that the rapeseed harvest there has stalled, giving rise to yield and quality concerns.

The UK rapeseed harvest meanwhile is said to be around halfway done, with yields "slightly above average" but with the prospect of better yields to come, according to ADAS. Even slightly above average would be a big improvement on a year ago. Earlier in the week MARS increased their forecast for UK yields from 3.76 MT/ha a month ago to 3.81 MT/ha. That's 28.1% up versus 2013 and 11.4% above the 5-year average.

Wheat prospects in the UK also still look promising. After a couple of poor harvests in a row, maybe we were due a change of luck in 2014?

22-07-2014 19:09 PM | EU Reports
22/07/14 -- EU grains markets posted a mini "Turnaround Tuesday" event, closing mostly higher, consolidating from recent heavy losses that have driven prices to multi-year lows.

The day finished with Nov 14 London wheat up GBP060/tonne at GBP127.65/tonne, Nov 14 Paris wheat ended EUR1.75/tonne higher at EUR178.00/tonne, Aug 14 Paris corn was down EUR5.25/tonne at EUR160.25/tonne, whilst Aug 14 Paris rapeseed was up EUR5.75/tonne to EUR314.75/tonne.

Fresh news was relatively thin on the ground. Russia’s Ag Ministry said that as of Jul 21 the country had harvested 31.7 MMT of grain on 9.1 million hectares. Average yields are said to be 3.48 MT/ha, up 19% on a year ago.

Is all the good news coming out of Russia simply too good to be true and at least partly a reaction to the bad press that they have been getting from the West lately?

We still don’t know how this developing situation will pan out. A best case scenario would seem to be an edgy stalemate developing, with Russia pulling back on its apparent support for the rebels in the east of Ukraine.

A deepening of the conflict would cause further destabilisation in eastern Ukraine, with the possibility of greater/extended Russian intervention. That could even lead to Russia attempting to annex Eastern Ukraine- where the majority of Russian speakers and sympathisers reside.

They did after all take Crimea with barely a whimper from the West.

Such a move would undoubtedly lead to tough “level 3” sanctions from Europe. This would make it more difficult for Russian banks and major businesses to access global capital markets. Don't forget that Russia is already teetering on the brink of recession.

Putin would not want that, but climbing down is not his forte. If the country was to be pushed into recession then who better to blame than the West?

Back to the fundamentals. Ukraine said that they'd exported 1.19 MMT of grain so far this month, including 232 TMT of wheat, 660 TMT of barley and 284 TMT of corn. Their harvest is also said to be going well by the Ag Ministry with yields up 7.5%, but who's to say that they aren't also playing the same game as Russia?

Currently international buyers still seem relatively relaxed about buying from Russia, but that’s a situation that could change quickly. Ukraine could also soon be viewed as an “unreliable” supplier if there were question marks raised over its ability to honour its contractual obligations.

Meanwhile, there's growing chatter that all is far from well with France's wheat harvest. The volume might be there, but the quality may not be. Reuters report that premiums for higher quality milling wheat jumped yesterday after more heavy weekend rains. Quality premiums are now "close to levels seen during the poor quality harvest of 2007," they said. Some French buyers are now looking to Germany for their requirements, Reuters suggested.

That could still spell bad news for feed wheat of course, especially with a large EU and FSU corn crop potentially waiting in the wings.

That may also explain the poor performance by Paris corn today, relative to the other grains. The wet weather may be damaging to milling wheat quality, but beneficial to spring planted corn.

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