EU Grains Jittery Ahead Of New Year

28/12/15 -- London wheat remains closed, and activity is predictably thin and volume light in Paris. Soon to expire Jan 15 Paris corn has extended it's period of "jittery" trade into the last week of the month.

At the close, Mar 16 Paris wheat was EUR1.00/tonne lower at EUR173.00/tonne, Jan 16 Paris corn was down EUR5.50/tonne at EUR145.00/tonne, whilst Feb 16 Paris rapeseed was EUR2.50/tonne weaker at EUR372.25/tonne.

As the year draws to a close, London wheat looks like ending 2015 around 15-16% lower than began it. with Paris wheat is set to close around 13-14% easier, with technical corn down 10-11% and rapeseed up 6% or so.

Continually hampering London wheat all year has the weakness of the euro, which is looking to close 2015 around 5.5% below where it started against sterling. In contrast sterling is down by around 3.6% versus the US dollar compared with 12 months ago.

The Russian Ag Ministry confirmed their 2015 grain harvest at 104.3 MMT. a small 1% fall year-on-year, although small volumes of tail-end corn and sunflowers are still being cut, they said.

That's not a bad result, and one that is far better than was feared/expected last spring, during the height of the troubles in Ukraine and talk of Western Sanctions against them slashing inputs. Yet here were are fully 12 months later wondering if 2016 bring similar results?

APK Inform said that Russian seaports had exported 685.8 TMT of grains last week, a respectable volume for a holiday week, and one that is only marginally down from 700.7 TMT the week before. Wheat accounted for 82% of that total.

Russia said that their total grain exports so far this season (Jul 1 to Dec 28) total 22.22 MMT, of which 70% (15.58 MMT) was wheat. That's a record grain volume for the first half of any post-Soviet era Russian grain export total.

Ukraine's grain exports last week were 652.7 TMT, which was actually up from 563.5 TMT the previous week. Corn accounted for 84% of their total last week an wheat only 32%.

As far as wheat goes, we came perhaps summarise 2015 as the 3rd year of global wheat production in a row (and the second successive year of all time high EU wheat output), combined with world ending stocks also rising for 2 years in a row to levels never seen before.

Early season worries about production problems in the FSU proved to be unfounded, and whilst early summer heat and dryness cut corn production here in Europe quite significantly, it came too  last to harm wheat output on our doorstep.

Meanwhile despite euro weakness, the EU is still struggling to keep exports competitive enough to usurp other origins - some of whom (eg Russia and Ukraine) have been aided even more by their own domestic currency weaknesses.

What will 2016 bring? The closing weeks of the old year often bring subdued, sometime technical, trade. The new year often brings with it  a new sense of vigour (even if it's downwards vigour!). It might be worth noting that wheat in London, Paris and Chicago all fell 21-22% between Jan and May this year once the bell herllding the arrival of 2015 sounded!