EU Wheat Close

Posted by Nogger - a legend in his own mind at 18:34 | Categorized as

07/01/11 -- Jan London wheat closed GBP1.15 lower at GBP195.60/tonne, with Nov GBP2.40 easier at GBP168.60/tonne. Jan Paris wheat fell EUR1.75 to EUR256.00/tonne, whilst new crop Nov declined EUR1.25 to EUR226.50/tonne.

EU wheat succumbed to a general broad-based agri-commodity sell-off on ideas that funds are about to start recalibrating their positions over the next five trading US sessions.

Latest estimates indicate that 35,000 lots of corn, 10,000 of soybeans and 20,000 of wheat may be sold by index funds during this period. In round figures that's around 9 MMT of those three commodities combined.

Clearly sales of that sort of magnitude could cause the market to have a little wobble at the very least. The threat of the USDA having another shock up it's sleeve in next week's January crop production reports seems to also be encouraging some long liquidation as traders book profits.

The pound rose above 1.20 against the euro for the first time since mid-September, causing London wheat to post larger declines than it's cross Channel neighbour.

Brussels reported that only 72,000 MT of soft wheat export licences were granted this past week. Whether that was due to seasonal factors or price rationing demand remains to be seen.

Algeria bought 350,000 MT of optional origin milling wheat, adding to yesterday's Tunisian purchase of 100,000 MT, perhaps indicating that price hasn't rationed demand too much yet.

An incredibly dry winter is evolving in the North China Plain winter wheat area, say Martell Crop Projections. Many parts of Henan province have seen no rain at all since late September.