EU Wheat Continues To Decline

Posted by Nogger - a legend in his own mind at 16:22 | Categorized as

23/11/11 -- EU grains ended mostly lower again although expiring Nov 11 London wheat unchanged at GBP143.25/tonne. Tomorrow's new front month Jan 12 finished down GBP1.50/tonne to GBP143.00/tonne and Mar 12 was down GBP3.00/tonne also to GBO143.00/tonne. Jan 12 Paris wheat ended EUR2.25/tonne easier at EUR179.00/tonne.

Nov 11 London wheat went off the board a whopping GBP56.00/tonne below it's high set six months ago in May. Meanwhile Jan 12 Paris wheat was very close to ending below key support at EUR178.50/tonne.

It was another widespread risk-off session, and for some stop-loss selling and capitulation kicked in ahead of a closed American market tomorrow.

Bad news is still coming thick and fast with Chinese manufacturing activity slumping to a 32-month low in November.

Yields on EU bonds were up again, and a German bond auction was heavily under subscribed. When the market doesn't even want those we really are in trouble. Italian 10-year bond yields rose to 6.97 percent, very close to the "critical" 7 percent. Spanish bond yields were trading at a similar level.

On the fundamental news front the EU are tomorrow expected to extend the existing waiver on import duties on wheat and barley, which expires at the end of the calendar year, until the end of the marketing year on June 30th 2012.

Ethiopia bought 300,000 MT of what was probably Black Sea wheat, and Israel is said to have bought a 100,000 MT combo of Ukraine wheat, corn and barley.

EU and US grain is still finding it difficult to find homes. Although French wheat wasn't priced as far out as it has been in Egypt's weekend tender the business still went to the Black Sea.

At current rates the EU-27 is on course to export 15 MMT of soft wheat in 2011/12, 2 MMT lower than the USDA currently estimate and almost 8 MMT down on last season.