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Paris Wheat Soundly Thrashed For A Second Session

Posted by Nogger - a legend in his own mind at 16:56 | Categorized as 08/05/15 -- EU grains closed mixed. London wheat was lower across the board following a sharp rally in sterling after it became clear that an outright Conservative win in the General Election was likely. None of this hung parliament or coalition nonsense.

Meanwhile the humiliation of the May 15 Paris wheat contract pales into insignificance the combined suffering of Ed Milliband, Ed Balls and Nick Clegg today.

The day ended with May 15 London wheat down GBP1.40/tonne at GBP107.90/tonne, May 15 Paris wheat crashed another EUR5.50/tonne lower to EUR156.00/tonne, Jun 15 Paris corn fell EUR0.50/tonne to EUR154.75/tonne whilst Aug 15 Paris rapeseed added EUR2.25/tonne to close at EUR354.25/tonne.

For the week that puts London wheat GBP3.90/tonne weaker, and within pennies of the lowest close on a front month since the summer of 2010.

If you think that's bad, spare a thought for those long-holders of May 15 Paris wheat. That's suffered a whopping EUR22/tonne loss in the past week, with EUR15/tonne of that coming in the past two sessions alone. We haven't seen a capitulation of that magnitude in a single week for many moons - and possibly ever - in the case of Paris wheat.

The May 15 contract goes off the board on Monday, so at least its pain will be over soon. Paris corn closed the week EUR1.25/tonne higher than it began it, and Paris rapeseed finished the week exactly even.

The spread between old crop May 15 and new crop Nov 15 has now widened to GBP11.10/tonne from GBP8.35/tonne a week ago in the case of London wheat. Interestingly, there's a further GBP9.00/tonne, or 7.6%, on offer to carry your new crop wheat (and even your old crop too!) all the way into Nov 16.

The premium on Dec 16 Paris wheat over the Dec 15 position is EUR10/tonne, or 5.7%, and the Jul 16 Chicago wheat contract is tonight paying 11.3% more than the Jul 15 position.

FranceAgriMer cut their good to very good rating on the French winter wheat crop by one point to 90%, but that's still far higher than 74% this time last year. Winter barley ratings also fell one point to 89% versus 73% a year ago. Spring barley ratings rose one point in the good to very good category to 96%.

Corn planting was estimated at 82% done, up 7 points in a week and 4 ahead of this time last year. They said that 7% of the winter wheat crop is now at the heading stage, up from only 1% a week ago but down from 14% this time a year ago.

The market is now looking to the fairly imminent arrival of new crop wheat, whilst glancing over it's shoulder at the large volume of old crop still being carried.

There's evidence that old crop exports are finally slowing down (on an EU-basis at least - UK exports never really got going at all). Brussels only issued 273 TMT worth of soft wheat export licences this past week, down from 587 TMT the previous week. Still, season to date exports now stand at 28 MMT, up 11% versus 25.2 MMT a year ago.

Russia's spring planting campaign is now 31% complete on 9.6 million hectares, that's 14% less than the 11.2 million ha that had been sown this time last year. Spring wheat planting is only 12% done, although more than half of the spring barley and corn crops have now been sown.

Rusagrotrans estimated Russia's May grain exports to fall to 0.9-1.2 MMT versus 1.35 MMT in April. A Russian newspaper said the the existing and punitive wheat export duty will be replaced with one of just a token USD1/tonne starting on Jul 1, provided that wheat prices remain below RUB12,000/tonne, which is currently the equivalent of around USD236/tonne. New crop offers for 12.5% Russian milling wheat are currently well below USD200/tonne.

The market will be looking to see how US farmers have done with their corn and soybean plantings in Monday night's USDA report (some think that corn planting could be 75% or even 85% done as of Sunday night versus only 58% complete a year ago). After that we get the latest WASDE report to chew on on Tuesday.

