Nogger's Blog

11/02/11 -- EU wheat futures closed mixed but mostly lower to end the week with Mar London wheat down GBP1.25 to GBP207.75/tonne, and Nov up GBP0.25 to GBP180.25/tonne. Paris wheat closed with Mar down EUR3.00 to EUR273.00/tonne and Nov falling EUR1.50 to EUR243.50/tonne.

Egypt's premier finally bit the bullet late in the day, too late to make much difference to the grain markets. Earlier today their state-run agency GASC bought three cargoes of wheat, none of them French origin. Australia, Canada and the US got the nod today.

Yesterday's news that weekly export licences granted by Brussels only managed to muster 128,000 MT, and today's missing out on the Egyptian tender maybe made traders think that EU prices are now high enough to ration demand.

It is worth noting that to reach the USDA's projected export target of 21.5 MMT the EU needs to export at the rate of 419,000 MT/week for the remainder of the 2010/11 marketing year.

That is starting to look quite unlikely given recent volumes and the success of the US, Australia, Canada and Argentina at recent international tenders. In addition the likely removal of the EU12/tonne levy on feed wheat imports into the bloc may also cap further attempts at a rally.

In the UK, compound feed sales are understandably sluggish at these levels, and February is of course a short month. Little old wheat at GBP200/tonne ex farm is currently more expensive than 35% protein rapemeal.

Northern Europe crops are finally getting beneficial rain, although soil moisture is still deficient in Spain, France, northern Italy and the Balkans where hardly any rain has been received in the past 6 weeks. The latest forecast is now finally calling for rain in the droughty areas, say Martell Crop Projections.