EU Wheat Ends Higher Despite Russian News

03/02/12 -- EU grains finish mixed but mostly higher with Mar 12 London wheat up GBP0.45/tonne to GBP167.45/tonne and Mar 12 Paris wheat rising EUR1.50/tonne to EUR217.25/tonne.

On the week overall London wheat was up GBP2.90/tonne and Paris wheat rose EUR8.25/tonne. London wheat set a near five month high this week, with Paris wheat rising to its best levels in almost eight months.

Russia surprised the market by saying that it was putting off a decision on restricting grain exports to another day, and then promptly announcing that 27 MMT was a level it would be comfortable with and that the government "doesn’t see grounds for any kind of grain export restriction in April this year".

It had been suggested by many that the latter scenario was likely given the existing rate of shipments.

They are said to have exported just over 19 MMT in the July/Jan period, with January's figure being around 1.1-1.3 MMT, so the rate of exports has certainly slowed considerably. That is partly a function of the weather, but it also seems clear that a lot of it is down to Russian offers not being as uber-competitive as they were.

Now that this issue has been cleared up, at least for now, the trade can fret over something else. Step forward this week's ultra cold weather in eastern Europe, pushing west into France and Germany. How much damage will that do to winter crops? The jury will remain out on that one for some time yet.

Elsewhere, the USDA attaché in Argentina estimates corn production there at 21.8 MMT, more than 4 MMT below the current USDA figure. Exports are seen at 14 MMT, 3.5 MMT below the current USDA estimate.

Stats Canada estimate wheat stocks there at 20.962 MMT, a little higher than the trade expected.

Brussels issued soft wheat export licences for 178 TMT this past week, bringing the year to date total to 8.1 MMT, 36% down on year ago levels. Exports have been pretty poor for the last six weeks, which is a long time to get over a Christmas hangover!