EU supply balance for cereals at the bottom

2015-16 - EU cereals supply price development with potential upward.

The EU Commission in the summer issue of the regular time short market report has published the latest estimates of EU grain supply.  According to the figures, the EU harvest is estimated at 296 million tons. The decline to the previous year is approximately 30 million metric tons.

A small increase of 2 million tons is estimated on the usage page . In the internal market are only a few quantities used for human consumption and the stagnating livestock feed needs. Industrial processing keeps within narrow limits.

However, the third country of export to the beating of element in the supply situation has become. Last year, exports reached a magnitude of 50 million tonnes, which ranged up to the US capacity. The international competitiveness of favoured in conjunction with a weak euro exchange rate the record harvest and a restrictive export policy of Russia.

For the current year 2015/16 the export amounts to significantly lower, remain still at the level of about 40 million tonnes.  Although the euro rate is still low, but lacking competitiveness compared to the black sea areas. In particular the still weaker Russian ruble provides unrivalled favorable export prices, where the EU exporters can't keep up to date. While quite sufficient quantities in France and other countries for export are available.

Should be the estimated figures confirm, the closing stock in the EU be dismantled again significantly . The level with approximately 30 million tonnes or 11.7% closing stock consumption lay rather in the bottom. Perspective of such supply development speak against falling prices, as they are observed in the current period.  

However, the grain price level is currently at 1. Determines the line from the low-cost offerings from Russia . The need to export the EU forces to go to with the currency-related low Russian prices, if one wants to not sit on the goods.

The Russian export offer is likely but encounter limits. Because, for one, is the approaching winter, which loaded or prevented, and more or less lame for at least 3 months sets the supply of port locations. The rising Russian equity demand for corn for use in the refining business will be another factor. Grain may be through exports not too scarce and expensive.  After 2 years of good, it is not small write the provision for a possibly weak crop year.

For the price , the El Niño weather phenomenonwaves even in the background. It should be noted that more than half of the world grain harvest not yet in place is. It's almost the entire crop of corn and wheat harvests in the southern hemisphere. Dryness in the Pacific moisture and flooding in North and South America are risks, whose first Anzeichen are obvious.

Should the weather developments with major damage affect the harvest results, the possibility of export will be taken more advantage. For pricing, margins are quite open upwards. Also for the EU.

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