Nogger's Blog

22/10/10 -- EU wheat futures closed mixed Friday with nearby London contracts slightly lower and the deferred positions slightly higher. In contrast Paris wheat did the exact opposite, with small gains nearby and modest losses further forward.

Currencies played a big part with the pound weaker across the board, falling to a six month low of 1.1233 against the euro and slipping under 1.57 versus the US dollar.

Nov10 London wheat ended GBP0.25 lower at GBP161.75/tonne, whilst Nov11 London wheat gained GBP1.00 to GBP138.25/tonne. Nov10 Paris wheat rose EUR0.75 to EUR209.50/tonne, whilst Nov11 fell EUR0.25 to EUR185.75/tonne.

The trade seems to have moved into a sideways pattern, after weekly (or even daily) price moves of GBP5/tonne had almost become the norm. Nov10 London wheat declined GBP0.75/tonne on the week as a whole, with Nov10 Paris wheat down by EUR5.25/tonne.

EU farmers are busy with winter plantings and overall the wheat area is expected to increase slightly whilst rapeseed sowings are called lower (although they're seen up here in the UK). The reason for the latter is largely due to enforced reductions in Germany and Poland due to far too much rain in August and September. The flip side of that is increases in wheat plantings in these areas.

Brussels issued soft wheat export licences for 621,000 MT this past week, bringing the total for the marketing year so far to 7.7 MMT, more than 50% up on where we were last year. That puts us on target to reach our 2010/11 projected export target by spring, potentially leaving a tight last quarter to the July/June marketing year.

Prior to this week there had been signs of a slow up in EU exports, albeit following on from the frenetic pace at the start of the season. The continuing strength of the euro may damp down a little demand for EU wheat, as illustrated by Egypt also buying US and Canadian wheat earlier in the week.