Nogger's Blog

19/01/11 -- EU wheat futures closed sharply higher with Jan London wheat up GBP3.50 to GBP194.10/tonne and Nov GBP2.40 higher at GBP171.50/tonne - a record high close for the contract. Paris wheat saw Mar climb EUR4.00 to EUR259.75/tonne and Nov rose EUR2.00 to EUR230.25/tonne.

The market got spooked by ideas that Europe really could run out of wheat, and quiet whispers of defaults on existing sales.

It's been known for a while that Defra's forecasts for UK wheat exports are full of "pie in the sky" and so it proved today when figures for exports for July/Nov came out, exceeding Defra's target for the entire 2010/11 marketing year.

A hefty 472,000 MT of wheat was exported in November, bringing the MY to date total to 1.66 MMT, well above the 1.33 MMT that Defra had factored in for the whole of 2010/11 with fully seven months left to go.

November was also the busiest month to date for UK exports, and 45% up on what was exported in October. The simple fact is that currently nobody knows what existing export commitments are in place for the remainder of the marketing year. Whilst sales may well slow down somewhat, recent estimates of shipments of 2 MMT already look conservative.

Strong buying interest has emerged again from North Africa in the past few weeks, and production worries abound for US, Chinese and Russian wheat - three of the world's top four producing nations.