EU Wheat Closing Comments

21/09/12 -- EU wheat closed mixed but mostly higher on the day, with Nov 12 London wheat up GBP1.30/tonne to GBP206.40/tonne and Nov 12 Paris wheat rising EUR2.50/tonne to EUR263.75/tonne.

For the week overall Nov 12 London wheat finished GBP0.60/tonne off last week's near 17-month closing high, with Nov 12 Paris wheat shedding EUR2.75/tonne.

Early support came from comments by Russia's Economy Minister saying "it's entirely possible that the government will decide to limit (grain) exports" although within a couple of hours the Deputy PM appeared to discount the idea saying "no limiting measures for the agricultural market will be taken."

The latter had previously said "as long as I am in charge of this sector, I will be against any export restrictions."

Sources inside Russia say that there is already little wheat left for sale within easy striking distance of the Black Sea. What is still available in places like Siberia is said to be priced too highly to compete on the current export market given the cost of transportation from such remote areas.

Unlike in 2010 when the last export ban was introduced, domestic Russian prices are holding up well it would seem. It looks therefore as if the Russian market will indeed regulate itself, without the government having to intervene. The latter course of action would cause them extreme embarrassment to say the least only weeks after finally gaining membership of the WTO.

The UK exported 2.545 MMT of wheat in 2011/12, according to the final figures from Defra. Carryover wheat stocks at the end of the season were said to be 1.5 MMT (although if you know where all that was then you probably win a prize) along with 0.9 MMT of barley.

EU exports continue to rub along at a decent pace, with Brussels granting 390.5 TMT of soft wheat export licenses this week, bringing the 2012/13 marketing year to date total to 2.93 MMT, although still a little behind last year's pace. Barley exports on the other hand are soaring compared with last year with a further 166 TMT of export licenses added this week.

Elsewhere, Kazakhstan said it had harvested 12.5 MMT of grains in bunker weight off 92% of the planted area, less than half of last season's volume.