Nogger's Blog

03/12/10 -- EU wheat futures closed higher once again Friday, with Jan London wheat up GBP2.45 to GBP187.45/tonne and Jan Paris wheat EUR1.50 firmer at EUR235.25/tonne.

This was London wheat's twelfth higher close out of the last thirteen trading sessions, during which time it has posted impressive gains of GBP31.70/tonne having risen more than GBP10.00/tonne this week alone. Paris wheat is up EUR17.00/tonne since last Friday.

London wheat is gaining on ideas that the domestic crop has been more aggressively sold for export in the last six months than anybody realised. UK exports are subsequently running well ahead of schedule, as too are those in the EU as a whole - 40% up on last season at the last count earlier this week.

That puts Europe on course to export almost 2 MMT more than the USDA currently predict, which would come straight off the bottom line ending stocks for 2010/11. At 10.7 MMT those are already forecast to be the smallest since 1983/84.

What are by now becoming well-documented problems in Australia sees the harvest in the east running 4-6 weeks behind schedule, with serious implications on quality, if not also now quantity starting to emerge.

Potential problems now also lie ahead for US and Russian winter wheat when it emerges from dormancy in the spring. US wheat currently has one of the highest poor/very poor ratings in the last twenty years at 17%. In the top producing US state of Kansas poor/very poor is now rated at a weighty 25%, further west in Colorado it's 40%.

Russian winter wheat plantings are forecast down 14% to 28 million acres, according to the IGC. That puts a lot of pressure on spring plantings, especially as spring wheat normally yields around 20% less than winter sown wheat in Russia. In addition, sunflowers are said to be a more profitable crop than spring wheat for Russian growers.