European Union-Grain sales.

EUROPEAN UNION-GRAIN SALES.

Currency movements are having some impact on the international grain trade with the euro weaker against the dollar resulting in the sale of 160,000 tonnes of EU feed wheat to the US.

Egypt has also been in the market recently purchasing 60,000 tonnes of French wheat.

Overall, the Paris-based Strategie Grains organisation expects the EU to export 20.1 million tonnes over the full 2008-9 crop year. This would be substantially ahead of the 18.1 million tonnes in the previous season.

The same agency is forecasting that the total area of wheat in the EU-27 for the 2009 harvest will be 22.64 million hectares, which is 2.5 per cent down on last year. Poor growing conditions, however, are predicted to see average yields fall from 5.77 tonnes per hectare to compared to 6.04 tonnes per hectare in 2008. Total EU wheat production, therefore, is forecast to fall from 140 million tonnes in 2008 to 130.62 million tonnes.

Rainfall in France during March was as much as 50 per cent below average and many crops are reported to be showing signs of stress.

In Germany, rainfall was 32 per cent above normal in March while Denmark saw an extra 15 per cent. In Spain, rainfall was close to average, but farmers are reported to have used less fertiliser.

The weakness of sterling is working to the advantage of UK traders with export sales of 255,000 tonnes in February, according to the Home Grown Cereals Authority. During the current season the UK has exported 2.6 million tonnes compared to just 1.08 million tonnes in the same period last year. However, it is reckoned that the UK requires to export more than 300,000 tonnes each month to clear the cumulative surplus of 3.9 million tonnes.

On the London futures market, wheat for November remains unchanged at £118 per tonne, but the European market for the same month is quoting 145.75 per tonne – an increase of 3.25 on the week. The Chicago market shows little change with soft red wheat quoted at $214.84 per tonne for December.

However, futures in oilseeds, including rape, soya and palm oil are all appreciably firmer.