Nogger's Blog

30/05/11 -- London wheat was closed due to the Spring Bank Holiday, but the continent was open with Nov Paris wheat closing EUR12.25/tonne lower at EUR238.75/tonne whilst May12 was down EUR9.75/tonne to EUR239.25/tonne.

For the record other Paris grains were also generally lower, with malting barley finishing with losses of EUR17.50/tonne, rapeseed down around EUR5-7.00/tonne and corn mostly EUR3-4.00/tonne easier.

The weekend announcement that Russia will lift it's existing export embargo on grains at the end of next month was the catalyst to set grains tumbling.

Russian trading houses have apparently been buying up surplus grain stocks, with domestic prices heavily discounted to those on the international stage, and moving them to the ports in anticipation of this move.

That would seem to indicate that, regardless of the potential of EU and/or US wheat production this year, Russia is likely to be ultra competitive in any upcoming tenders with an estimated 10 MMT of old crop wheat to shift before new crop becomes available.

Ukraine will of course be fighting them all the way. Russian traders will be conscious of the country's tarnished reputation as a reliable supplier, and will be looking to eradicate those thoughts as quickly as possible. And what better way to smooth things over than with price?

Where the volume interest will come from is another matter, with the world's largest wheat buyer in Egypt saying that a good domestic crop and high international prices mean that it doesn't need to buy anything for some time. Internal politics and lack of cash may also have something to do with it.

US markets are closed for Memorial Day, so it looks highly likely that wheat there too will be lower in the morning.

The north and west of the UK had a pretty wet and miserable Bank Holiday weekend, with many parts of France and Germany also seeing some precipitation of sorts. That may add to the bearish sentiment tomorrow.