Nogger's Blog

21/12/10 -- London wheat closed almost universally higher with Jan up GBP2.00 at GBP194.00/tonne and new crop Nov GBP1.75 higher at GBP163.75/tonne. Paris wheat closed with Jan up EUR3.75 at EUR244.75/tonne and Nov climbing EUR2.25 to EUR218.25/tonne.

This was the highest close for a London wheat front month in history.

Defra revised this season's UK wheat production estimate up slightly to 14.9 MMT. We're going to need all of that at the rate that exports are going.

The head of the Russian Grain Union suggested yesterday that their export ban may extend beyond July 1st. The only surprise from that quarter would be if it was to end on July 1st if you ask me. He's already talking of fertiliser shortages in the spring and we know that winter wheat plantings are down sharply too.

The Chinese government have agreed to sell off 1.5 MMT of it's own wheat stocks to local millers in return for a cap on flour prices in the run up to the Lunar New Year in February. That's still quite a long way off yet, and more subsidised sales may be needed in a country that consumes around 9 MMT of wheat every month.

Drought is also a problem in northern wheat growing areas there, that may mean that they need to replenish stocks in 2011 via increased imports, according to trade gossip.

The Australian wheat harvest is ongoing, but there are all sorts of reports relating to quality issues there including vomitoxin.

Meanwhile, in North America drought from Mexico is expanding up into the US Great Plains. The last important rainfall in western Kansas was in September, according to Martel Crop Projections. Kansas accounts for around a quarter of all US wheat production.