Nogger's Blog

15/03/12 -- EU grains finished higher with front month Mar 12 London wheat up a nominal GBP3.50/tonne to GBP172.00/tonne although the position didn't actually trade all day. May 12 was up GBP1.50/tonne to GBP172.00/tonne. May 12 Paris wheat ended EUR3.50/tonne higher at EUR214.25/tonne.

This was the highest close for a front month for London wheat since early September as EU wheat followed US grains higher.

Strategie Grains reduced their estimate for EU soft wheat production this year by 1.6 MMT from last month to 131.1 MMT. Durum output was also cut by 400,000 MT to 8.4 MMT. Even so an all wheat crop of 139.5 MMT would still be around 2 MMT more than last year.

This year's barley crop was also trimmed 1.2 MMT to 53.4 MMT, again that still represents a slightly better performance than a year ago when we had a crop of 52.1 MMT.

Winterkill losses, particularly in France, and drought losses in Spain are behind the cuts. In contrast corn production potential was raised 2 MMT to 64.6 MMT on ideas that failed winter crops are most likely to be replanted with corn this spring.

Despite a huge freight advantage French wheat was overlooked in a tender by Egypt today who booked on cargo each of Canadian and US wheat for May shipment. Argentine and Ukraine wheat was also offered but passed on. French offers were around USD26/28 more expensive than the winning bids.

Brussels issued soft wheat export licences for 426 TMT this past week, bringing the 2011/12 marketing year-to-date total to 9.8 MMT, 33% down on where we were a year ago.

The Ukraine Ministry said that grain stocks there as of March 1st were 69% higher than a year ago at 21 MMT. Of that 8.1 MMT was wheat, around half of which looks like getting carried into 2012/13 as "insurance" against sharply lower production this season. Corn output on the other hand could be a record for the second year running if weather conditions are conducive across the summer.