EU Wheat Closing Comments

Front month November London wheat closed GBP4/tonne lower at GBP148/tonne, with November Paris wheat ending down EUR6.75/tonne at EUR205.25/tonne.

The phrase "not for the faint-hearted" springs to mind, with November London wheat already GBP21/tonne below the high set less than a fortnight ago.

Ukraine introduced a grain export quota of 3.5 MMT for the remainder of current calendar year, that will apparently include the circa 1 MMT already lined up at the docks waiting to leave.

That hardly seemed to make a difference today however. It's a bit worrying when news that would have been seen as inherently bullish only a fortnight ago is now being almost completely ignored.

Egypt bought 55,000 MT of US hard wheat today at USD277.50/tonne plus USD44/tonne freight. That equates to USD321.50/tonne CIF, fully USD11.50/tonne cheaper than the price German wheat was offered at.

It would seem that the Egyptians are maybe not quite so much over a barrel as we thought in Europe. The recent flurry of buying activity surely owes more to replacing existing deferred/cancelled Russian shipments than anything else? What happens when this dries up?

America still have more than three times the volume of wheat to sell that they did back in 2007/08, and seem only to glad not to turn the gift horse away at these kind of levels.

US wheat acres have declined by more than 8 million during the past two seasons. Despite recent price declines, winter wheat planting still looks an attractive proposition and will doubtless be clawing at least some of that area back this autumn.

Meanwhile European farmers won't let a little thing like a GBP21/tonne decline put them off upping the winter acreage ante either, not with prices still massively above what they could only have dreamed of less than six weeks ago.