Nogger's Blog

06/10/11 -- EU grains finished higher for a second day with Nov London wheat up GBP1.65/tonne to GBP150.15/tonne and Nov Paris wheat climbing EUR1.50/tonne to EUR186.75/tonne.

We aren't trading the fundamentals any more, we are following the stock market which is reacting to the unfolding European debt crisis. Let's just say that as far as the latter is concerned nothing bad happened today, so the market went up.

If you want fundamentals then the word out of today's HGCA event was that the UK wheat crop this year was 15.4 MMT, a 3.5% increase on last year despite everything that the dry spring could throw at it.

In addition this year's rapeseed crop came in at 2.78 MMT off 705,000 ha, a record volume off a record area,according to Defra.

Coceral meanwhile gave us a 5.7 MMT increase in EU-27 corn production to a record 62.95 MMT. Soft wheat production was pegged at 128.39 MMT, almost 3 MMT up on last month, whilst durum output was broadly unchanged at 7.81 MMT for an all wheat crop of 136.2 MMT - virtually unchanged on last season and far better than what was expected in the early summer.

Coceral also raised it's EU-27 rapeseed production estimate by almost half a million tonnes to just under 19 MMT.

The pound dropped below 1.15 against the euro as the Bank of England announced an increase of GBP75 billion in QE. Both the BoE and the ECB left interest rates on hold at 0.5% and 1.5% respectively. There had been some calls/expectation that the ECB might lower rates there.