EU Wheat Closes Mostly Higher Despite Currency

EU wheat futures closed mostly higher Wednesday despite a weak dollar having a potentially negative impact on the competitiveness of EU cereals on the export market.

Paris November milling wheat closed up EUR2.50 at EUR159/tonne, London November feed wheat closed GBP0.50 higher at GBP130/tonne.

Talk of sharply lower production across much of Eastern Europe, and also in Spain, looks like there is going to be a lot less wheat around in 2009/10.

US futures continue to climb with spring wheat planting delays seeing in excess of a million acres going into alternative crops, mostly soybeans.

Early winter wheat yields in the US are said to be extremely disappointing after drought and an early April freeze badly affected crops in the Southern Plains. In Kansas, Oklahoma and Texas many farmers are ripping up their winter wheat fields early and claiming crop insurance before attempting to quickly get an alternative crop into the ground.

Further north in North Dakota, where spring wheat has just about run out of time to get planted by this weekend, soybeans or corn look like a much more attractive proposition.

Plantings in Argentina and Australia are also under threat from drought.

Meanwhile in the UK a large premium for new-crop still exists which will encourage farmers to carry old crop wheat rather than sell, if they have the storage capacity. An improved weather outlook here may mean more milling wheat and less feed grade this year. It could hardly be worse than last year, could it?

It's still early days but with a final crop of around 3 MMT less than 2008 already expected, and hopefully a higher proportion of milling wheat, we could be looking a smaller feed wheat supply of 5-6 MMT this year. Throw in a 1 MMT+ worth of extra demand from Ensus, you will buy British like you promised won't you lads (?), and the supply:demand equation is starting to look a lot different next time round.