Nogger's Blog

09/12/11 -- EU grains ended mostly lower with Jan 12 London wheat down GBP1.25/tonne to GBP142.25/tonne and Jan 12 Paris wheat falling EUR0.25/tonne to EUR179.50/tonne.

Once again there wasn't actually a great deal of movement on the week as a whole with London wheat finishing just GBP0.90/tonne lower and Paris wheat down EUR1.75/tonne.

It remains to be seen what the full repercussions are for the future of the EU-27 as we know it, and the UK's part within it, after David Cameron's surprise European treaty veto.

EU and US wheat continue to miss out in a series of high profile wheat tenders, with Brussels granting just 142,000 MT of soft wheat export licences this week. That's the second lowest weekly total of the season so far.

The USDA were out with a raft of data, raising the world wheat production estimate by 5.7 MMT to an all-time high of 689 MMT. That came mostly by virtue of increases of around 1 MMT each for China and Canada, 1.5 MMT for Argentina and 2.3 MMT for Australia.

They left EU-27 wheat production unchanged at 137.5 MMT, with Russian and Kazakh output also left the same as last month at 56 MMT and 21 MMT respectively. It should be noted that they are probably too low on the former and almost certainly too low on the latter. The FAO earlier this week pegged Russian output at 58 MMT and Kazakh production at 24 MMT.

World corn production was also seen 8.5 MMT higher at 867.5 MMT, with the EU-27 accounting for 1 MMT of that increase with a crop here of almost 64 MMT - the second highest on record.

On the international trade front the USDA acknowledged that US wheat exports would not reach their previous target of 26 MMT, revising that aim down to 24.5 MMT.

They left EU-27 wheat exports unchanged at 17 MMT, although we will need to speed up a little from the current rate to reach that goal - we've only exported 6.6 MMT so far and we're almost at the halfway point of 2011/12.

Australia is now seen emerging as the second largest wheat exporter in the world, breaching the 20 MMT mark for the first time in it's history shipping out 21.5 MMT in 2011/12 to get within 3 MMT of America as the world's largest wheat supplier.

World wheat ending stocks were hiked almost 6 MMT to 208.5 MMT, the highest this century and within 2 MMT of the largest in history.

The USDA data all looks rather bearish, especially when taken within context of the European debt problems. Under the circumstances wheat performed rather well to only end with nominal losses on the week. Will we get a delayed reaction to these numbers next week?