EU Wheat Edges Higher

EU wheat futures edged higher as the dollar firmed, theoretically improving EU wheat on the export market.

March Paris milling wheat closed up EUR2.75 at EUR145.50/tonne, and May London feed wheat ended up GBP1.25 at GBP114.25/tonne.

In tender news Egypt's GASC bought 60,000mt of Russian wheat and Saudi Arabia's government bought 400,000mt of Canadian wheat.

Whilst this isn't hugely bullish for EU wheat it does once again take some competitors wheat off the export market.

Russia also has some logistical problems of it's own to contend with according to media reports. They might be the cheapest shop in town, but if they aren't open and you want the stuff tomorrow then you need to go elsewhere.

Golden Sacks said they they are fairly friendly to wheat in a report, citing strong world demand and reduced 2009 production. Their 12-month price forecast for Chicago wheat is $7.70 a bushel, significantly higher than current levels of $5.75-$6.00/bushel.

The Australian and Argentine crops are now in the bag. Attention now must focus on the northern hemisphere again. With plantings estimated 9% lower in the US, 8% lower in the EU-27 and 10% lower in Russia and Ukraine the 2009 crop is unlikely to be as large as last season.

In addition, crop conditions in Europe are certainly worse than a year ago, with crops in many countries planted late and in cold, poor conditions. Throw in some yield losses due to weather & reduced fertiliser applications and things could look very different a year from now.

Gregg's Bakery, Leicester, England - December 2009