EU Wheat Year End Closing Comments

Posted by Nogger - a legend in his own mind at 14:24 | Categorized as

30/12/11 -- EU wheat finished mixed but mostly higher on the last trading day of the year with Jan 12 London wheat up GBP0.75/tonne to GBP152.25/tonne and Jan 12 Paris wheat falling EUR0.75/tonne to EUR202.50/tonne.

Despite the recent mini-rally London wheat finished 2011 GBP46.75/tonne, or 23.5%, lower than it began it. The closing high for the year was GBP217.50/tonne set in April and the closing low was GBP141.00/tonne set earlier this month.

Paris wheat put in a slightly better performance, aided by the weak euro. It closed 2011 EUR50.00/tonne, or 19.8%, lower than it was twelve months previously. The high of the year was EUR278.50/tonne established in February and the low EUR178.50/tonne set on the last day of November.

Both performances were worse than US wheat which "only" fell by 18% in Chicago, Kansas wheat declined by 15% and Minneapolis wheat by just 2.6%.

To offer some crumb of comfort this was the highest front month close for London wheat in two months, with Paris wheat ending just below yesterday's more than three month high.

As we approach the new year there are still plenty of conflicting balls in the air to decide market direction in 2012.

On the bear side we have world wheat stocks running at their highest levels in more than a decade, and within 2 MMT of their highest in history. We also have the albatross that is the European debt crisis and signs of a slowdown in Chinese growth.

For the bulls there's drought in South America and rising tensions in the Middle East as Iran threatens to close the Strait of Hormuz which carried more than a third of all seaborne crude oil this year.

We also have the not insignificant matter of around 2.5 million of Ukraine's 8 million hectares of winter grains needing replanting in the spring and an unusual winter drought developing in the Dakotas, Minnesota, Iowa and northeast Nebraska.

There are a few unknown factors to consider too like whether fund money will decide to get back into grains in 2012.

Four months ago non-commercial funds had a net long position of over 270,000 Chicago corn contracts. Last week's Commitment of Traders report showed those same funds are now long less than 45,000 contracts.

It's never easy this game is it? Best wishes to all for a healthy, happy and prosperous 2012.