EU Wheat Closing Comments
London wheat managed to post a rare higher close Monday with March ending up GBP0.45 at GBP97.50/tonne, and Paris March wheat closing unchanged at EUR125.50/tonne.
That was only London's fourth higher close so far this year out of 25 sessions, not a very impressive record for a contract that began the year at GBP109.20/tonne.
The pound dipping below 1.59 against the US dollar for only the second time this year helped UK prices nudge higher from the start.
Apart from that, and a modest correction from the recent downturn, there was very little to get excited about. Prices are stuck in a rut, and that rut points downwards.
Like it or not, winter wheat plantings are done, and across Europe at least they are up. A bit of extra demand from the odd bioethanol plant here and there is not going to take up the increased carryover and extra production anticipated in 2010.
Now 1.2 MMT (the projected requirement of a little plant on Teesside that you might have heard of) might sound like more than "a bit" - but at the end of the day it is "only" 8% of the UK production in 2009.
We are now more than halfway through the 2009/10 marketing year, and the facility concerned hasn't really consumed anything yet in wheat terms. So that knocks that down to a utilisation of less than 4% of last year's wheat crop - and that is if it were to run on full capacity from day one.
Knock off some more for the fact that it clearly won't, and this big new consumer that the UK wheat trade is hoping to be it's salvation will maybe only mop up 2%, at the most 3%, of the UK's 2009 crop. That hardly seems like a life saver to me.
That was only London's fourth higher close so far this year out of 25 sessions, not a very impressive record for a contract that began the year at GBP109.20/tonne.
The pound dipping below 1.59 against the US dollar for only the second time this year helped UK prices nudge higher from the start.
Apart from that, and a modest correction from the recent downturn, there was very little to get excited about. Prices are stuck in a rut, and that rut points downwards.
Like it or not, winter wheat plantings are done, and across Europe at least they are up. A bit of extra demand from the odd bioethanol plant here and there is not going to take up the increased carryover and extra production anticipated in 2010.
Now 1.2 MMT (the projected requirement of a little plant on Teesside that you might have heard of) might sound like more than "a bit" - but at the end of the day it is "only" 8% of the UK production in 2009.
We are now more than halfway through the 2009/10 marketing year, and the facility concerned hasn't really consumed anything yet in wheat terms. So that knocks that down to a utilisation of less than 4% of last year's wheat crop - and that is if it were to run on full capacity from day one.
Knock off some more for the fact that it clearly won't, and this big new consumer that the UK wheat trade is hoping to be it's salvation will maybe only mop up 2%, at the most 3%, of the UK's 2009 crop. That hardly seems like a life saver to me.
