EU Wheat Down Again

Posted by Nogger - a legend in his own mind at 18:55 | Categorized as

09/03/11 -- It was another one of those days. EU wheat was higher for much of the session, but a weak opening by Chicago and everything soon sold off. Traders' confidence has taken a real battering over the past month or so where we've seen Mar London wheat decline by GBP21.15/tonne and Mar Paris wheat by EUR40.25/tonne since Feb 9th.

EU wheat futures ended the day with Mar London wheat down GBP2.25 at GBP189.10/tonne, and new crop Nov falling GBP1.55 to GBP155.95/tonne. Paris wheat closed with Mar down EUR5.00 to EUR238.25/tonne and Nov EUR3.25 easier to EUR208.50/tonne.

This was Paris wheat's lowest close for a front month since 17th December and London wheat's lowest since 9th December.

As far as UK feed wheat is concerned, it has priced itself well and truly out of the market. Feed manufacturers report business to be generally sluggish at best, as livestock farmers liquidate numbers and hold off buying expensively priced finished feed.

So feed demand is slack, and at close to GBP200/tonne for feed wheat on a delivered basis, wheat is still one of the most expensive raw materials within the ration.

Open interest in May Paris wheat is still fairly hefty at the equivalent of 3.7 MMT, that may see the May/Nov spread continue to narrow.

FranceAgriMer increased their estimate for last season's soft wheat crop there by 200,000 MT to 37 MMT today.

Rain has arrived for parched winter wheat on the US Plains, although amounts are said to be "disappointing" in many parts. Further north spring wheat areas are cold and wet, with the problem extending across the border into Canada, where prairie temperatures are 10-15 F below normal, according to Martell Crop Projections.