EU Grains End Lower, But Outperforming US Wheat And Corn

Posted by Nogger - a legend in his own mind at 17:10 | Categorized as

29/03/12 -- EU grains finished mostly lower ahead of tomorrow's all important USDA reports with May 12 London wheat down GBP1.65/tonne to GBP171.00/tonne and May 12 Paris wheat falling EUR4.25/tonne to EUR207.00/tonne.

The USDA will give us some guidance tomorrow on US plantings for the 2012 harvest and also March 1st US stocks. Whilst wheat is probably the least likely to spring a surprise what they have to say for corn will almost certainly influence wheat prices too.

Whilst weather conditions are bordering on ideal across the Atlantic things don't look quite so rosy here in Europe. That is reflected by the recent price action for wheat and corn here compared with in the US.

Chicago corn prices have fallen 8% in less than a fortnight, with wheat prices there declining 6% in the same period, based on last night's closing levels. Yet at last night's prices Paris wheat was only down 1% and London wheat was actually marginally higher on where it stood back then.

It's not surprising then that French wheat was overlooked in yesterday's Egyptian tender in favour of much cheaper US and Argentine wheat.

This lack of competitiveness of European wheat is also maybe reflected in the fact that Brussels only issued 210,683 MT worth of soft wheat export licences this past week, the lowest total of the past six weeks.

The 2011/12 marketing year to date total now stands at 10.47 MMT, 32% lower than a year ago with only 13 weeks left to go.

In tender news, Bangladesh bought 50TMT of Indian wheat for April/May shipment. The latter isn't normally an eager exporter but has plentiful carryover stocks left over from last year and has just begun what it expects to be a record wheat harvest in excess of 90 MMT for 2012.

As I am about to hit the "publish" button May 12 Chicago corn trades lower for the seventh session out of the last nine at USD6.11 1/2. A quick look at the weekly chart shows that it has only closed lower than that four times out of the past fifty two weeks. In other words we are trading within the bottom 8% of where US prices have been across the whole of last year.

In stark contrast at GBP171.00/tonne May 12 London wheat has been lower on no less than 36 occasions on the weekly chart in the past year. That means we are currently trading within the top 31% of where prices here have been over the last twelve months.