Nogger's Blog

17/02/11 -- EU wheat futures closed higher, rebounding from steep losses over the past couple of days with Mar London wheat up GBP2.50 to GBP203.50/tonne, and new crop Nov also up GBP2.50 to GBP173.15/tonne. Paris wheat closed with Mar EUR2.50 higher to EUR264.00/tonne and Nov rising EUR1.50 to EUR235.50/tonne.

Strength came from overnight and afternoon gains in US grains, and ideas that sharp losses over the past couple of days may have been overdone.

French analysts Strategie Grains trimmed their 2011 EU grain production estimates slightly from last month, although all are up on last year. Soft wheat output was pegged at 135.5 MMT, down 0.1 MMT from last month but up 8.9 MMT from last year.

Barley production fell 600,000 MT from January to 55.2 MMT, although that still represents an increase of 2.3 MMT on 2010. Corn output is now seen at 58.3 MMT, compared with 58.6 MMT last time and 55.2 MMT last year.

There is talk of dryness in central and southern France, northern Spain and Italy.

Brussels brought forward it's decision on abolishing EU feed wheat and barley tariffs by a week to today, and agreed to lobbying from feed groups to waive both for the remainder of the season.

Opinion is divided as to whether this will open the door for a flood of cheaper foreign imports (particularly Australian feed wheat) or not. Certainly there is interest for them closer to home from China and Malaysia/Indonesia, however given the unusual size of surplus feed wheat Down Under this year and the slump in freight rates some of that excess is indeed likely to find it's way to southern Europe I feel.