EU Wheat Ends Mixed As Year End Approaches

20/12/11 -- EU grains ended mixed with Jan 12 London wheat down GBP0.20/tonne to GBP145.80/tonne, Jan 12 Paris wheat rising EUR2.75/tonne to EUR191.75/tonne.

London wheat was higher early in the day but slid into negative territory late on as the pound rose close to 1.20 versus the weak euro. For Paris wheat this was the highest close for a front month in six weeks.

UK merchants report that farmer selling interest has increased as ex farm levels have risen back into the GBP140.00/tonne plus range for the new year.

As well as expecting a record wheat crop this year Australia is in for an all time high OSR harvest too. The Australian Oilseed Federation is estimating output at a record 2.95 MMT, up 37% on last year.

India is also set to establish a record of it's own, bringing in a wheat crop in early 2012 in excess of this year's all-time high 85.93 MMT, according to the Farm Secretary there.

Russia is also re-writing the record books, having just harvested new highs for rapeseed (1.1 MMT), soybeans (1.5 MMT) and sunflower seed (8 MMT). Whilst it's bumper grain harvest of 92 MMT isn't am all-time high it is up more than 50% on last year.

Neighbouring Kazakhstan has a record wheat crop of it's own to market, whilst Ukraine has an all-time high grain harvest led by corn production that is up 75% on last year.

Meanwhile the US is expected to plant a post-war record area of corn in 2012.

It seems therefore that maybe this mini rally in grains is more to do with year-end profit-taking and book squaring than anything else. Only time will tell.