What a day for Paris to take the limelight.
With US markets closed for the Memorial Day holiday, it was the Matif which provided the conduit for investors' reaction to Russia's decision to lift its grain export embargo, as from July 1.
"We do know that there have been only favourable reports of the Russian winter
Whatever, Russia has a reputation as being fiercely price-competitive on
For much of the day, investors' response was pretty relaxed, limiting losses to less than 3%. But nerves failed in the closing minutes to send the benchmark November lot down 4.9% to E238.75 a tonne by the finish, not too far off its intraday low.
"You can't blame people for getting a bit jittery," said a grain trader in the UK, where London's futures exchange was also closed for a national holiday.
Sure, the move "was hardly a surprise, and it's not clear how much Russia will actually export".
And "it was not until June that last year's [Russian] drought became apparent", meaning that wheat was unlikely to lose all its risk premium overnight.
"But you can understand people want to play it careful, until we see the reaction from the US."
As for estimates for Russia's exports, SovEcon, the Moscow-based analysis group, has pegged them at about 15m tonnes –all grains – while lobby group the Russian Grain Union said on Monday that 20m tonnes might be achieved.
For wheat only, "the market estimates Russian exports will be around 8m-10m tonnes in 2011-12," Australia & New Zealand Bank said.
Sure, that is higher than the 4m tonnes expected for 2010-11, following last year's drought-damaged harvest, but below the previous three-year average of 16m tonnes.
And analysts are lowering forecast for the European Union wheat harvest, and exports, too, although some rains on Monday may have improved the dryness a touch. (The western England area around Agrimoney.com's office received some nine hours of moderate but consistent rains.)
The weakness spilled over a little into the
Paris's August lot closed down 0.4% at E492.00 a tonne, despite comments from Toepfer, the grain trading house, that Germany's rapeseed crop, Europe's biggest, had suffered irreversible damage from dry weather (having already sustained relatively high winterkill losses) and could fall by more than 20%.
The decline was the contract's first fall in 12 trading sessions.
In Canada, futures in rapeseed variant
With production enjoying a strong seasonal rise, traders said they were looking for evidence of firm consumption before committing.
And in Tokyo,