Nogger's Blog

25/02/11 -- EU wheat futures closed sharply higher, rebounding from some steep losses over the past couple of days with Mar London wheat up GBP4.00 to GBP201.50/tonne, and new crop Nov up GBP3.00 to GBP166.75/tonne. Paris wheat closed with Mar EUR12.00 higher to EUR259.00/tonne and Nov rising EUR6.50 to EUR222.50/tonne.

It's been one hell of a week, not that you'd realise it from a casual glance at the weekly chart. That would simply show you Mar London wheat losing GBP3.50/tonne on the week, with Nov down GBP7.30/tonne.

At one stage on Wednesday Mar London wheat stood GBP17.50/tonne below last Friday's close, with Nov was down GBP25.55/tonne. Mar Paris wheat was showing losses of EUR32.50 at one point before ending the week just EUR3.75/tonne lower.

In Paris, open interest in Mar has declined from 32,000 lots to less than 4,000 in the past fortnight as longholders unwind their positions. However, in the more active May and Nov positions we've seen open interest there increase from 70,000 and 153,500 to almost 79,000 and over 176,000 lots respectively in the same period. In the latter case that's 8.8 MMT.

Brussels issued soft wheat export licences for 439,000 MT this past week, most of which was for France (332,000 MT). That brings the total for the marketing year to date to 13.6 MMT, 2 MMT ahead of this time last year.

With eighteen weeks of the current 2010/11 MY remaining we need to continue to export at that rate every week to hit the USDA's 21.5 MMT target for this season. The euro strength we've seen this week may hinder that progress, faced with competition from Argentina, Australia and the US.

Developments in the Middle East look likely to continue to dominate trade in the weeks ahead. Brent crude has a quiet day Friday, closing just USD0.78/barrel higher at USD112.14/barrel, well off the high of USD119.79/barrel set Thursday.