EU Wheat: Christmas Eve Close

Posted by Nogger - a legend in his own mind at 14:47 | Categorized as

24/12/10 -- Twas the night before Christmas, when all through the house, every man and his dog was bullish, and so was their mouse - Clement Clarke Moore (1779 - 1863).

London wheat finished a predictably quiet pre-holiday shortened session with Jan GBP0.25 higher at GBP197.50/tonne and new crop Nov up GBP1.00 to GBP166.25/tonne. Apart from January, the other three old crop contract months all closed at GBP200/tonne or higher for the first time ever.

Jan Paris wheat closed the session EUR1.75 higher at EUR249.75/tonne, whilst new crop Nov gained EUR0.50 to EUR220.00/tonne. Paris rapeseed, corn and malting barley were all flat to higher too.

Nobody wants to sell this market short, even at these levels. It's perhaps extremely telling that the bulls are fully prepared to sit on their longs across the holiday period, rather than cash in profits ahead of a four day shutdown in the case of London wheat.

Volume was light as you might expect. With US markets closed a day earlier than Europe for the festive break, there was little fresh impetus apart from carryover sentiment from yesterday.

Drought worries in southern Russia still haven't been resolved in the Stavropol, Krasnodar and North Caucasus regions.

Meanwhile there's an ongoing drought in the North China Plain, which has received no important rain for 90 days, according to Martell Crop Projections. Henan, which accounts for around a third of China's substantial winter wheat output, is expected to begin cloud seeding before long in an effort to break the drought, according to media sources.

The likelihood of further yuan appreciation in the New Year may spur further Chinese buying of grains, as they seek to rebuild stocks depleted by substantial government auctions during 2010 in a desperate bid to keep spiraling food price inflation under control.

The probability of increased money flows into the agri commodities-sector once we get into January looks set to see further price appreciation ahead.

Best wishes for a healthy, happy and peaceful Christmas. Nogger.