Nogger's Blog

05/11/10 -- Nov10 London wheat closed with modest GBP0.20 gains at GBP169.00/tonne, whilst Nov11 was unchanged at GBP146.00/tonne. Paris wheat finished with Nov10 up EUR4.75 to EUR225.25/tonne and Nov11 rose EUR1.00 lower to EUR198.25/tonne.

I think that most traders will be glad to see the weekend and reconvene next week, regrouping after we have the latest USDA WASDE numbers to hand.

Lower US corn production estimates are what everyone seems to be expecting. The Linn Group estimated corn yields at 154.1 bushels per acre yesterday, down from their 158.2 bpa October number and below 155.8 bpa from the USDA last month.

Exactly how much these lower estimates are already factored into the market is what we don't know.

US corn exports are tailing off at current price levels. So too are EU wheat exports. Although Brussels issued 196,000 MT of soft wheat export licences this week, there has been a developing trend in recent weeks to show that the rapid early export pace has eroded quite sharply. Last week we had export licences of 389,000 MT and the previous week it was 621,000 MT.

Legitimate concerns remain over US winter wheat prospects where the crop has got off to a very poor start, particularly in the top-producing state of Kansas.

The trade is relying on a decent US crop in 2011 to make up for a likely continued shortage of cheap Russian wheat. Lower winter wheat plantings, and an acute shortage of carryover stocks at the end of the current 2010/11 season, already look set to hamper Russia's export prospects in 2011/12.