Nogger's Blog

26/05/11 -- EU grains closed sharply higher with July London wheat up GBP2.25 at GBP196.00/tonne and with new crop Nov closing GBP5.25 higher at GBP198.50/tonne. Nov Paris wheat rose EUR8.00/tonne to EUR2452.75/tonne whilst May12 was up EUR6.25/tonne lower to EUR251.25/tonne.

The bulls certainly had it today, with Paris wheat setting contract highs and Nov London wheat setting a contract lifetime high close, and getting within GBP0.25/tonne of last week's all-time high.

New crop London wheat traded at a premium to old crop for the first time this season.

Paris wheat was supported by the euro falling to 1.16 against the pound for the first time since Mar 11.

Minneapolis wheat meanwhile raced to it's highest in three years on continued spring wheat planting delays in the Dakotas and Canadian Prairies.

Brussels granted export licenses for another 230,000 MT of soft wheat this week, bringing the 2010/11 year to date total to 17.4 MMT.

The ICG came out with an inexplicably optimistic EU-27 wheat production estimate, cutting just 3 MMT off last month's prediction to 141.1 MMT. That still represents a 4.2% increase on last season. That included French production at 39.0 MMT and UK output at 15.7 MMT.

A Bloomberg survey out today however seemed much more realistic. The median estimate of seven analysts and traders surveyed by them pegged the EU wheat crop at around 131 MMT.

The most bearish assessment came from Offre et Demande Agricole who placed production this year at just 128.6 MMT, a 10 MMT reduction on the USDA's estimate earlier this month.

EU production of soft wheat is forecast at 122.3 MMT, based on the median estimate of five analysts and traders, the report said.