EU Grains End Lower Across The Board

08/12/15 -- EU grains traded mixed mid-morning, but were lower across the board by the finish.

At the close, Jan 16 London wheat was down GBP1.15/tonne at GBP112.10/tonne. In Paris, Dec 15 wheat was down EUR3.00/tonne to EUR168.75/tonne, Jan 16 corn was EUR1.75/tonne lower at EUR163.50/tonne and Feb 16 rapeseed had fallen EUR3.75/tonne to EUR379.25/tonne.

In France, Senalia and Nord Cereales announced that they were re-opening their silos in Rouen and Dunkirk for the intake of wheat again after a recent temporary closure whilst they waited for exports to pick up. They join Socomac who made such a move with their silo in Rouen last week.

The constant opening and suddenly shutting again once full of these facilities - the only ones against which deliveries can be made against the Paris wheat futures contract - has been a real pain, and one which has highlighted the inadequacies of the terms of the MATIF contract in the last few years.

This helps explain some of the erratic behaviour that we have seen from the front month Paris wheat contract over the last year or so.

Last night's Paris wheat close saw front month Dec 15 end at a EUR7.50/tonne, or 4.4%, discount to the Mar 16 contract. A month ago the difference was EUR5.25/tonne, or 2.9%. By comparison, the differential between Jan 16 and Mar 16 (not exactly the same thing, but not far off) London wheat was 2.7% last night.

The old crop/new crop spread in Paris wheat, comparing the Dec 15 and Dec 16 contracts was 10.2% last night. The spread using the currently less technical Mar 16 contract and the forward Mar 17 position was only 6.7%. In London, the Jan 16/Jan 17 spread was still a rather wide 13.6%.

In a market seemingly devoid of opportunities, trading around these spreads and premiums appears to offer some sort of hedging possibilities. Note too that there are additional premiums on offer for the very far forward Nov 17 London wheat and Dec 17 Paris wheat contracts too.

It may be worth considering at this stage that Australia's ABARES today forecast that they expect world wheat prices (in US dollar terms) to average out at a 10-year low $215/tonne this season.

In other news, Russia said that they'd exported 19.34 MMT of grains so far this season (Jul 1 to Dec 7), including 13.69 MMT (or 72%) of wheat.

Their 2015 calendar year grain exports are said to be 32.21 MMT, of which 19.36 MMT (60%) was wheat.