Nogger's Blog

24/02/15 -- EU grains closed mixed, but mostly a little higher, consolidating from recent losses, and buoyed by the current excellent pace of EU wheat exports. The pound rising to new 7-year highs against the euro however remains a thorn in the side of UK export ambitions.

At the finish, Mar 15 London wheat was unchanged at GBP118.50/tonne; Mar 15 Paris wheat was EUR1.00/tonne higher at EUR185.75/tonne; Mar 15 Paris corn was EUR0.25/tonne lower at EUR149.25/tonne; May 15 Paris rapeseed was EUR5.25/tonne higher at EUR361.75/tonne.

The pace of Russian exports has certainly slowed since the new duty on wheat shipments was introduced at the beginning of the month. The country's Feb 1-18 grain exports were only 596 TMT, of which 220 TMT was wheat, 225 TMT barley and 120 TMT corn. Russian exports in the first 17 days of December for comparison were over 1.7 MMT, including 1.15 MMT of wheat.

Russia's Jul 1 - Feb 18 exports still come in 31% higher than they were a year ago, totaling 23.9 MMT, of which 18.7 MMT was wheat, 3.6 MMT barley and 1.3 MMT corn. That helps explain why the Russian government decided to put the breaks on wheat exports when they did, especially with estimates flying around that winter grain production could come in up to 40% lower this year.

Spring grain plantings are not seen compensating for this, in fact they are officially expected to be 2% lower this season. Unofficially, they could be down a lot more than that.

Russia say that they will provide short-term subsidised loans to farmers to help with their spring planting, but the deputy head of the Russian State Duma says that currently only a small proportion of Russian farmers will be able to take advantage of what is on offer due to lack of collateral.

The promised RUB 14.4 billion is not enough either, they say, and they have written to the government asking for a further RUB 15 billion due to the "ever increasing cost of production".

Russia's intervention purchase program meanwhile bumbles along at a spectacularly unspectacular pace. They only picked up 4,185 MT of grain today, taking the total purchased so far (since Sep 30) to less than 360 TMT out of an intended target of 2.5-3.0 MMT.

In tender news, Jordan are in the market for 100 TMT of optional origin milling wheat for June shipment. Tunisia bought 42 TMT of optional origin durum wheat for Mar-Apr shipment. South Korea are tendering for 207 TMT of corn, 69 TMT of feed wheat and 12 TMT of feed barley, all of optional origin. It wouldn't be out of the question for Ukraine corn and French feed wheat to feature in the latter tender.

Morocco's Ag Ministry are forecasting a record cereal crop of 10 MMT there this year, which if achieved would cut back on their import needs. Their 2014 harvest was around 7 MMT. They begin harvesting wheat around May.

In Egypt, the Supplies Minister says that they have enough wheat now bought to last them through until late May, by which time they will be harvesting their own new crop. Planting of winter grains concluded in December. Vegetation health maps suggest good establishment of winter crops, according to the FAO.

Nevertheless, the world's largest wheat buyer is said to have re-opened a tender to potentially buy US wheat, using a line of credit extended to it for $100 million by the US.