London Wheat Closes At 15 1/2 Month Low

15/11/11 -- EU grains ended mixed with Nov 11 London wheat down GBP1.00/tonne to GBP146.00/tonne and Jan 12 Paris wheat EUR2.25/tonne higher at EUR185.00/tonne.

European credit woes continue with yields on Italian bonds back up above 7% and Spain paying 14-year highs to sell 3.2 billion euros of short-term debt today. Yields on 2-year French debt also shot sharply higher.

That had the pound residing around 1.17 against the euro for much of the day, putting London wheat under pressure relative to it's French counterpart. This was a 15 1/2 month closing low for a front month in London wheat.

UK wheat exports in September were 277 TMT, down 30% year-on-year bringing cumulative shipments during the first quarter of 2011/12 (Jul/Sep) to 559 TMT, down 35% year-on-year.

The recently publicised UK sale(s) to the US were probably made a couple of months ago and prices have fallen considerably since then. South Korea reportedly bought two cargoes of feed wheat at sub-USD260/tonne delivered today, reputedly one of the lowest prices that they've paid in more than a year and a significant discount to UK wheat.

The Andersons Centre are forecasting a UK wheat area of just under 2 million hectares once again for the 2012 harvest. Winter barley plantings are seen rising 5% to around 375,000 ha, but the spring barley area is called 6% lower to 573,000 ha.

Buoyed by a bumper crop this year, and some very decent oil levels too, the UK rapeseed area is seen rising to a record 758,000 hectares, 8% up on last year. That would give us our first ever 3 MMT crop if we could match this season's yields.