EU Wheat Soars To Fresh Highs

EU wheat futures rose to fresh multi-year highs Friday with November London wheat ending GBP4.55 higher at GBP142.50/tonne and November Paris wheat up EUR7.25 at EUR195.25/tonne.

London wheat gained GBP8.55/tonne on the week, with Paris wheat adding EUR16/tonne. London wheat probably would have added more but for the strength of the pound.

Harvest results coming out of Russia indicate that barley and OSR yields are sharply lower this season. Wheat yields aren't coming in quite as bad so far, down 12% on 2009. Trade talk however seems to indicate that wheat exports will be severely curtailed this season. There are already concerns surfacing over plantings of winter wheat under these conditions.

Output of milling wheat in Ukraine is likely to be well below the pace of consumption in 2010/11, that means very limited exports, and possibly even imports for the former Soviet state.

Egypt are back in the market tendering for 120,000 MT of wheat this weekend. They've already pre-empted the recent market tightness by relaxing their strict import rules, but will doubtless be faced with a huge price increase from the astonishingly low levels they managed to achieve as recently as late June.

Four weeks into the 2010-11 marketing year Brussels have issued export licenses for 927,000 MT of soft wheat, 13% down on last season. EU imports however are a hefty 85% down on year ago levels at just 107,000 MT.

German trading house Toepfer peg winter wheat production there at 23-24 MMT (down from an estimated 25.56 MMT just last month and 25.16 MMT in 2009). Barley output is now seen around 10 MMT (10.56 MMT; 12.29 MMT) and rapeseed production at 5.5 MMT (5.83 MMT; 6.31 MMT).