Nogger's Blog

23/09/11 -- EU grains finished mostly lower again with Nov London wheat was down GBP0.05/tonne to GBP156.50/tonne and Nov Paris wheat ending EUR.50/tonne down at EUR191.50/tonne.

It was a topsy-turvy sort of a day that saw wheat try hard to put in some sort of consolidation phase after a week of fairly hefty losses. Whilst the market traded both sides ultimately it was the downside that won again with Nov London wheat finally finishing with losses of GBP5.25/tonne on the week and GBP18.25/tonne on the month so far.

Make no bones about it, risk aversion is what is behind the declines that we've seen this week and this month so far. If you're a grower that may seem terribly unlucky, however it should be remembered that risk appetite is what got us up above GBP200.00/tonne in the first place.

Crude oil has fallen 30% from the 2011 highs set at the end of April, if London wheat was down by a similar amount then today's price would be GBP143.50/tonne and Paris wheat EUR171.00/tonne. On that basis you could almost argue that wheat prices have got off quite lightly across the summer relative to other commodities.

Russia now plans to export 23 MMT of grains in 2011/12, according to their First Deputy Prime Minister, the highest estimate of the season so far. Production, and thus export potential, out of Kazakhstan and Ukraine is also on the rise.

The IGC yesterday upped their 2011/12 world wheat production estimate by 2 MMT, raising carryover stocks by a similar amount. For corn they reduced world output by 4 MMT, but saw usage falling 5 MMT giving us a 1 MMT increase in ending stocks.

An unexpected "Indian Summer" could be on the way for Europe. WxRisk say that a huge high pressure dome is going to form over the heart of Western Europe which will keep all of Spain, France, United Kingdom, Germany, Poland, Austria, Italy and Hungary warm and dry. Temperatures could just reach into the 80s for several days over many areas from next week into early October.