EU Wheat Ends Lower Friday

EU wheat futures closed slightly lower Friday with November London feed wheat down GBP0.50 at GBP131/tonne, and November Paris milling wheat down EUR0.25 at EUR161.50/tonne.

The International Grains Council upped it's global wheat production estimate for 2009/10 fractionally to 652 MMT (+0.2%), although they lowered world grain production by 0.3% to 1.721 billion MT.

The main reason for the increased wheat production were upward revisions for China and Russia. Even so, production in Russia is still seen lower than last season, as is also the case for at least another of the world's top five exporting nations: the US, Canada and Ukraine. The unknown quantity in the top five is Australia, who is only just beginning to plant it's wheat crop.

In the UK the weather has improved dramatically over the last few weeks, and with it the overall condition of this year's wheat. Hopefully this will mean more better quality milling wheats in 2009, and a little less feed and low-bushel weight grain.

A sharply weaker dollar was also a little bearish for EU wheat, with the pound hitting it's highest levels against the US unit since early November, and the euro reaching it's highest levels of 2009 so far.

Supportive news are early reports from the US on the first winter wheats being cut in the southern Plain states of Oklahoma and Texas throwing up some very poor yields.

Spring wheat seedings in North Dakota, the largest producing US state by far, have been running well behind schedule and this weekend is widely regarded as the cut-off point for planting if farmers hope to achieve anything like a decent yield. Additionally, crop insurance will only pay out at reduced rates on spring wheat planted after 31st May, which may also encourage some switching into soybeans or corn.

CBOT wheat futures have gained around 20% this month.