Nogger's Blog

15/07/11 -- EU grains finished mixed with Nov London wheat down GBP1.15 at GBP165.00/tonne and with May falling GBP1.65/tonne to GBP171.50/tonne. Nov Paris wheat rose EUR2.25/tonne to EUR200.00/tonne whilst May12 climbed EUR1.25/tonne to EUR204.00/tonne.

On the week as overall Nov London wheat was just GBP0.25/tonne higher, with Nov Paris wheat adding EUR4.75/tonne. The continuing decline of the euro being responsible for French gains relative to London's token increase.

The recent arrival of rains across much of Europe may have come just in time for wheat, according to Strategie Grains. They've increased their EU soft wheat production estimate by 4.6 MMT from last month to 130.2 MMT. All wheat output is now seen at 138.4 MMT, a 2% increase on last year and a far cry from the doom and gloom scenario that many had feared.

The rains could also certainly do wonders for corn production, which Strategie Grains now peg at 60.2 MMT this year. That's an increase of 9.5% on 2010.

EU export licences were issued for 249,000 MT of soft wheat this past week, an advance at least on last week's meagre 110,000 MT. Even so wheat imports are now outstripping exports, coming in at 820,000 MT during the past week meaning that we imported more than three times the volume exported.

The suspension by Brussels of the import duty on wheat certainly seems to be having a significant impact.

Egypt bought three cargoes of Russian wheat for the second week in a row, passing on offers of US and French wheat. The winning bids came in at around USD245-247/tonne, whilst the cheapest French bid was USD279/tonne.

Clearly money talks, any thoughts of Russia's reliability as a supplier goes out of the window when each 60,000 MT cargo is roughly USD2 million cheaper than the French option.