Russian grain exports withdraw until rouble stabilises

EU grains were mixed, with wheat trading higher on further Russian jitters. Paris wheat closed at its highest levels since May.

The day ended with Jan 15 London wheat up GBP1.55/tonne to GBP134.00/tonne, Jan 15 Paris wheat was EUR5.00/tonne higher at EUR195.00/tonne, Jan 15 Paris corn was EUR0.25/tonne easier at EUR158.50/tonne, whilst Feb 15 Paris rapeseed ended EUR4.00/tonne lower at EUR344.00/tonne.

The Russian rouble had a wild day, even by its recent standards, hitting new all time lows against both the US dollar and euro. At one stage it had lost 50% of its value against the dollar in just six weeks.

After last week's 1% interest rate rise caused little more than a momentary ripple in the international currency markets, the Russian Central Bank decided that a bit of "shock and awe" was in order. They announced an interest rate hike from 10.5% to 17%, meaning that rates in Russia have almost doubled in a week!

Brent crude meanwhile slipped below $60/barrel for the first time since July 2009, further piling the pressure on the rouble.


Whilst Russian wheat prices are good in rouble terms, in dollar terms they're a disaster. Rapidly rising inflation meanwhile could only be serving to encourage farmers that still have grain to sell to hold onto their remaining stocks as a hedge against the demise of the domestic currency.

Russian exporters meanwhile are likely to withdraw from the market until the rouble stabilises.

There are also now reports that the Russian Veterinary and Phytosanitary Surveillance Service (VPSS) has said that it will only issue export certificates for grain bound for Turkish, Egyptian, Armenian and Indian buyers.

That sure sounds like an export restriction to me, if true.

Bear in mind that Russia's 2015 budget is said to have been drawn up on the basis of crude oil being $100/barrel and the dollar being worth 35 roubles, when in fact it almost hit 80 today. There's now much discussion of the possibility of a Russian debt default.

All of this is also clearly likely to affect Russian growers' ability to fund their spring planting program and the purchase of inputs in 2015.

In other news, Coceral raised their estimate for the EU-28 soft wheat crop in 2014 from 147.9 MMT to 148.5 MMT. That's an 8.8% increase on last year. They also increased their corn production estimate from 72.8 MMT to 73.5 MMT, a 16.3% rise on the previous year.


For barley production they now go 60.16 MMT versus 59.38 MMT a year ago, and for OSR they are at 24.12 MMT versus 20.8 MMT in 2013.

For the UK specifically, they forecast this year's wheat crop at 16.52 MMT (11.92 MMT last year), with barley output unchanged at 7.0 MMT and OSR production at 2.51 MMT (versus 2.22 MMT a year ago).