Nogger's Blog

14/06/11 -- EU grains extended their recent declines with July London wheat finishing GBP5.00 lower at GBP183.00/tonne and with new crop Nov falling GBP3.10/tonne to GBP177.25/tonne. Nov Paris wheat closed EUR5.25/tonne lower at EUR218.75/tonne whilst May12 declined EUR5.25/tonne to EUR223.00/tonne.

July London wheat has now fallen GBP35.00/tonne, or 16%, from it's contract high set less than two months ago. It's difficult to put a concrete reason behind it's fall from grace, as old crop stocks do remain undeniably tight.

The problem is that few people want them at these levels. Wheat has well and truly prices itself out of feed rations, demand for which remains slack as the livestock sector continue to battle to make a margin.

Export interest is similarly sluggish, the UK exported only 93,000 MT of wheat in April, the lowest so far during the 2010/11 marketing year according to customs data released today.

There's a general air of malaise about. Rising US unemployment, concerns over Greek debt and divisions within the EU as to how to tackle it (Standard & Poor's cut their credit rating from B to CCC yesterday and warned that further downgrades are likely) and worries about inflation in China forcing the central bank there to up bank's reserve requirements for the ninth time since October.

On top of all that the US Senate is set to vote today on whether to repeal the contentious US ethanol blenders' 45c/gallon tax credit. Reports are already circulating of producers there taking downtime as margins get squeezed with US corn at record levels.

On the export front Egypt bought one cargo each of US and French wheat in a tender today, their first appearance in the market for four months. Russian and Ukraine wheat was excluded from the tender. Algeria are shopping for 50,000 MT each of wheat and barley too.