EU Grains Begin Week On The Offensive

09/01/12 -- EU grains ended with Jan 12 London wheat up GBP2.80/tonne to GBP154.55/tonne and soon to expire Jan 12 Paris wheat up EUR1.75/tonne to EUR202.75/tonne.

Jan 12 Paris wheat goes off the board tomorrow, new front month March closed EUR6.00/tonne higher at EUR201.25/tonne. You could say that that suggests that the front-end premium that we've seen of late maybe hasn't really been justified, and why should it exist at all in fact?

Argentine weather dominates the start of another trading week. Some are saying that this is the worst drought in 70 years, and could cause more damage than the one of 2008/09 that slashed corn and soybean output by around 30%.

Yet others say that the drought can "in no way be compared to what happened in 2008," according to a report on Bloomberg today quoting Argentina’s National Institute for Farming Technology.

Whichever is true, it is the market's perception of reality that is important right now.

In other news German farmers have planted 5.52 million hectares of winter grains for the 2012 harvest compared to 5.34 million a year ago. The German Statistical Office say winter plantings of wheat are 3.23 million ha (+2.0%), barley sowings are 1.24 million ha (+5.6%) and those of winter OSR at 1.32 million ha (+1.3%).

Chicago grains came in firmer and swiftly moved sharply higher in afternoon trade, adding to enthusiasm for EU wheat.

The European debt crisis is still bubbling along under the surface. Data today shows that Italian & Spanish bank deposits declined sharply during Oct/Nov, raising fears a deposit outflow trend has already started in Italy and Spain.

Later in the week we have the USDA's revised numbers on US crop production in 2011, plus quarterly ending stocks, 2011/12 ending stocks and an assortment of world production numbers.