Nogger's Blog

21/10/11 -- EU grains finished up but well off session highs with Nov London wheat climbing GBP1.00/tonne to GBP147.75/tonne and Nov Paris wheat EUR2.25/tonne higher at EUR187.75/tonne. Nov London wheat was more than a fiver higher at one brief stage mid-afternoon but capitulated later in the day.

On the week as a whole Nov London wheat ended just GBP1.25/tonne higher and Nov Paris wheat rose EUR3.00/tonne.

The pendulum swung marginally back in favour of eurozone optimism today, although anything could have happened by this time next week.

Market fundamentals are turning increasingly bearish (with the possible exception of in the US) with Black Sea wheat already looking increasingly likely to dominate proceedings right through until next harvest. Kazakhstan's harvest is finally just about finished, blowing the previous post-Soviet era production record completely out of the water with silos said to be overflowing and grain being stored in trucks, railcars, anywhere.

Ukraine's export duties on wheat and corn officially get lifted tomorrow, and they are likely to waste little time in marketing their wares with a Ministerial record export target of 27 MMT having been set this week.

Australia is said to be undercutting US corn prices into Asia (including China) by some USD60/tonne with it's large carryover stocks of old crop feed wheat, before getting cracking with what could be an imminent record new harvest of it's own.

In Europe, wheat demand is slack with ports in the UK's normal top export home of Spain said to be choc-full of wheat, most of it shipped in recently from cheaper sellers in eastern Europe and the Black Sea.

Demand for UK wheat elsewhere on the Continent has also gone quiet this week with Czech, Polish and German B wheat appearing onto the market for the first time since June, traders say.

Market direction next week then is in the hands of Merkel/Sarkozy et al, will they deliver? They haven't done so yet.