Nogger's Blog

09/02/11 -- EU wheat closed sharply higher with Mar London wheat leaping GBP4.25 to GBP210.25/tonne and new crop Nov GBP3.00 higher at GBP181.00/tonne. Mar Paris wheat rose EUR2.50 to EUR278.50/tonne, with Nov up EUR4.25 to EUR245.75/tonne.

Throw the record books away again, as today's close has just rewritten them. All London wheat contracts posted lifetime highs, and Mar11 set a new record all time high for a front month. All Paris wheat contracts barring Aug12 also posted lifetime contract highs.

The USDA shocked the market again by knocking 70 million bushels off their US corn ending stocks estimate for the current 2010/11 season. That was more than 50 million more than the trade was expecting, sending US corn futures sharply higher in afternoon trade to test the psychologically important USD7/bushel level.

They also cut world corn ending stocks to 122.5 MMT, a 37-year low and the 4th tightest in the past 50 years.

After all that excitement the USDA's wheat and soybean numbers, which were actually neutral or maybe even slightly bearish, got swept to one side.

Chinese drought concerns are a worry for wheat production there, whilst the US crop isn't out of the woods yet either. Heavy snow has fallen this week in many parts of Nebraska, Colorado, Kansas and Oklahoma. That may help fill in some of the gaps where wheat was lying unprotected from sub-zero temperatures.

As far as drought concerns in these states go, the snow was reported as largely being "dry and powdery" by QT Weather with "not a whole lot of water in it" so it may not do too much to replenish depleted soil moisture profiles once it melts.

European news was limited. FranceAgriMer upped their forecast for French wheat exports outside the EU by 300,000 MT from last month to a record 12.1 MMT. That would represent an increase of 23.5% on last season, as North Africa and the Middle East clamour for quality wheat in the global marketplace.