EU Wheat Mixed

It was another mixed and subdued day in Europe with March London wheat ending down GBP0.95 at GBP93.00/tonne, and May Paris wheat closing EUR1.00 higher at EUR125.00/tonne.

Algeria bought 300,000 MT of EU origin wheat, which seems to be most likely French material. Tunisia also bought a small 25,000 MT of probably French wheat.

French analysts Strategie Grains reduced their estimate of EU-27 2010 soft wheat production by 600,000 MT to 134.1 MMT from last time, even so that is still a rise of 4.2 MMT on last year.

UK wheat production will come in at 16.02 MMT they say, a fall of 180,000 MT on what they estimated last month, but still more than 11% higher on last year. Output in Ireland was also cut 140,000 MT from last month.

The EU-27 reduction reflects the "probability of winterkill losses" in Eastern Europe, they say.

Also on the cards is a sharp increase in demand from the bioethanol sector, for 2010/11 demand here is seen up 1.8 MMT from 2009/10 at 6.6 MMT, an increase of over a third.

All that might read quite bullish, but it is maybe really only a little bit of light at the end of the tunnel in reality.

Stocks are still too high, and EU production is still seen increasing. Prices may rise modestly from where they are but I can't see it being any more than that, a modest increase.

If you plant it they won't (necessarily) come. To paraphrase a Kevin Costner film.

That said, you want to try buying the stuff beyond the next few months. For all the "we are awash with wheat and can't give it away brigade" give me a sexy price that isn't linked to futures for an Oct10/Mar12 run please. You are saddled with burdensome stocks after all, I will help you into the unsaddling enclosure.