Nogger's Blog

03/06/11 -- EU grains closed with July London wheat down GBP0.45 to GBP195.00/tonne and with new crop Nov up GBP1.55/tonne to GBP193.00/tonne. Nov Paris wheat closed EUR1.50/tonne lower at EUR234.25/tonne whilst May12 was down EUR1.25/tonne to EUR238.50/tonne.

Based on today's exchange rates Nov London feed wheat is only 20 euros cheaper than French milling wheat, which sounds like a relatively a small differential to me.

Maybe that's a function of weekend weather forecasts being on the wet side across the Channel yet remaining dry over here? In addition, reports are coming through of farmers in the SE of the UK already talking of using wheat for whole crop silage rather than see what can be gleaned from it come August.

On the week as a whole July London wheat was GBP1.50/tonne lower, whilst Nov fell GBP4.00/tonne. Nov Paris wheat EUR15.00/tonne and May EUR10.50/tonne.

That means that Nov London wheat has only fallen 2% since last Friday, whereas Nov Paris wheat is down 6%.

The pound fell to a four week low against the euro after weaker than expected PMI data. Even so the euro is hardly a strong currency at the moment, and neither is the dollar. Going into the second half of 2011 the pound may prove to be marginally the best of a bad bunch.

London feed wheat therefore may be a little over-valued, although farmers are understandably reluctant sellers until they have a better handle on yields here.