Nogger's Blog

05/04/11 -- May London wheat closed GBP0.25/tonne higher at GBP204.00/tonne with new crop Nov down GBP0.15 to GBP171.05/tonne. May Paris wheat rose EUR4.25/tonne to EUR250.25/tonne whilst Nov was up EUR2.50/tonne to EUR219.75/tonne.

Wheat was strongly higher in early trade, but fell away later in the session, particularly London wheat as the pound rose against both the dollar and the euro.

Early strength was tied to the USDA last night reporting US winter wheat crops in their worst condition since the 2002/03 crop year. That season saw the lowest US wheat production since the early 1970's.

Ukraine downgraded it's wheat production forecasts for 2011 to 20.5 MMT from earlier estimates of 21.3 MMT.

Front month US corn rose to it's highest price ever this afternoon, even eclipsing the 2008 previous record high on strong demand and very tight projected ending stocks. The USDA are set to report on those again on Friday and may tighten the old crop balance sheet even further. That could potentially peg US stocks at less than four days worth of demand.

The market remains almost universally bullish with confidence more or less fully restored following a heavy shake-out in the wake of the Japanese tsunami and subsequent nuclear crisis and the escalation of conflict in North Africa, particularly Libya.

The so-called "smart" money is back into buying agricultural commodities - funds have bought an estimated 100,000 lots of CBOT corn over the last three trading sessions,.

As ever, they usually have a good run at having their own way. Also, as ever, the ability of the livestock sector to afford to pay these levels is of no concern to them.