EU Grains Close

08/04/11 -- May London wheat closed GBP1.25/tonne higher at GBP206.75/tonne with new crop Nov up GBP0.25 to GBP169.50/tonne. May Paris wheat fell EUR2.50/tonne to EUR247.25/tonne whilst Nov was down EUR3.50/tonne to EUR215.00/tonne.

A firm euro on the back of the ECB's decision yesterday to raise eurozone interest rates by a quarter to 1.25% put Paris wheat under pressure. Even so French wheat stocks remain very tight with France having picked up 83% of the EU's 15.7 MMT worth of soft wheat export licences so far in the current 2010/11 marketing campaign.

An unusually dry March has given way to an unusually dry and warm April thus far, with temperatures in Cambridge hitting 23C earlier in the week. A glorious weekend lies in store for most parts of the UK, before colder and wetter weather sets in from the middle of next week and into the run-up to Easter. If it does arrive then these rains will be heartily welcomed by most growers.

May London feed wheat closed at around a EUR14/tonne discount to May Paris milling wheat, whereas November in London is around EUR25/tonne cheaper than in Paris.

Either May London wheat is too dear or Nov is too cheap. At well over GBP200/tonne again wheat finds only soyameal priced more expensive than it when looking down the list of popular raw materials featuring in a most feed manufacturers rations.

"They like to so it (wheat) on the ticket," said one to me this week. Meaning that livestock farmers like to see wheat featuring high on the list of raw materials included in their finished feed. They might like it on the ticket, but do they like the price of it on their invoice?

The USDA's world supply and demand numbers released today were largely bearish, particularly for corn where US 2010/11 ending stocks were left unchanged, as opposed to the sharp cut the trade was anticipating. After opening lower though Chicago quickly turned higher as the trade shrugged the numbers off as being unrealistic.

Egyptian wheat production was dropped 1.3 MMT to 7.2 MMT, although consumption there was also reduced by 900,000 MT to 17.5 MMT. World ending stocks were increased by 1 MMT to 182.8 MMT, 15.1 MMT or 7.6% down on last year, but pegging stocks to usage at a more than ample 27.6%.