London Wheat Stuck In GBP140-145 Range

16/12/11 -- EU grains ended mixed with Jan 12 London wheat down GBP1.00/tonne to GBP142.00/tonne, Mar 12 unchanged at GBP142.05/tonne and May 12 up GBP0.30/tonne to GBP144.00/tonne. Jan 12 Paris wheat was up EUR1.75/tonne to EUR183.50/tonne.

On the week as a whole Jan 12 London wheat was GBP0.25/tonne lower. Jan 12 Paris wheat managed to do a bit better, posting a gain of EUR4.00/tonne. Prices the other side of the Channel got support this week from the ailing euro against which the pound rose to its best levels since February.

At the risk of repeating myself we remain stuck in a very narrow range. This was the twentieth session in a row that London wheat has closed within the GBP140-145.00/tonne band.

The problems in Europe continue to hang over the market. Ratings agency Fitch downgraded six of the world's largest banks and are now switching their attention to entire countries, revising its outlook on France to "negative" from "stable". They added that downgrades were also being considered for Belgium, Spain, Italy and Ireland amongst others.

Harvesting in the southern hemisphere is ongoing. The Buenos Aries Grain Exchange estimate the Argentine wheat crop at 13.6 MMT, up from 13.0 MMT previously. Private estimates suggest that Australia's crop could top 29 MMT, beating last year's record output.

As we head into the depths of winter early indications are that the EU-27 2012 wheat crop will be around 3-4% higher than in 2011 by virtue of better yields in the west.

Russian wheat is said to be in decent condition overall, but much of Ukraine's crop will need replanting in the spring. That may see a further switch into corn production there for 2012.

Informa Economics now peg US winter wheat plantings at 39.833 million acres, down 813,000 acres from last year. Spring wheat plantings are however expected to at least partially offset some of this reduction. Corn sowings there this spring are now seen at 94.389 million, a post-war record.

Russian wheat exports have slowed up a little from their early season phenomenal pace, whilst Ukraine has concentrated its efforts more on shifting it's record corn crop. Kazakhstan is left stuck with it's own record wheat harvest waiting for some spare capacity to become available at ports on the Black Sea.