EU Wheat Closing Comments

EU wheat futures closed higher Friday, following strong gains in Chicago and a firmer dollar.

Paris March milling wheat closed up EUR2.75 at EUR152.00/tonne. London May feed wheat ended up GBP1.25 at GBP123/tonne.

UK futures were supported by the pound plunging to it's lowest levels against the US dollar since 1985.

In the UK the latest available customs data only runs to the end of November. That shows 1.65mmt of UK had already been exported as of that date, with about a third of that tonnage going to Spain.

Up to Jan. 20, EU-27 wheat export licences had been issued for 12.405mmt during this marketing season (July08/June09), a 250% increase from 3.537mmt as at the same time last season.

Although this highlights that exports are progressing well, they need to maintain this pace to avoid having a large carryover into next season.

The condition, and potential size, of next season's crop will start to become clearer over the next couple of months. Official estimates at this stage seem to range from a crop only 2-3% lower than 2008's to maybe up to 8-10% lower. Weather and the magnitude of fertiliser application in the spring will decide.

As you probably know I don't usually like to go with the crowd, I'm going for a 15% reduction on a combination of late plantings, poorer soil conditions and reduced inputs. Plus you can throw in some weather-related yield losses somewhere or other too.