EU Wheat Attempting To Defy Gravity

20/01/12 -- EU grains ended with Jan 12 London wheat down GBP0.25/tonne at GBP157.00/tonne and Mar 12 Paris wheat was unchanged at EUR198.50/tonne.

EU wheat continues to do a pretty good job of attempting to defy gravity, closing GBP1.50/tonne higher on the week. Paris wheat clawed it's way EUR1.00/tonne higher compared with last Friday.

Weather models have developed a wetter look for Argentina this weekend, with 1-3 inch totals expected to add to last week's similar amounts. The cooler temperatures that this front is expected to leave behind should also be of benefit.

Despite downgrading corn output forecasts for both Brazil and Argentina yesterday the IGC say that they still expect both countries to produce record corn crops this year.

Brussels issued 175,000 MT of soft wheat export licences this week, bringing the marketing year-to-date total 7.7 MMT so far, a 36% decrease on where we were this time last year despite a larger crop this time round.

US analytical firm Informa Economics today estimated that American farmers will plant 57.9 million acres of wheat for the 2012 harvest, an increase of 3.5 million, or 6.4%, on last year. That's 600,000 acres up on their December estimate.

For corn they came out with 94.75 million acres, up 2.8 million on last year and almost 360,000 acres higher than they suggested in December. That's around 1.2 million acres above the current post war record high of 93.5 million set in 2007 when US farmers gleefully jumped on the ethanol bandwagon.

If they're right, and US yields in 2012 were to return to a trendline 160 bu/acre, that would produce a monster crop of around 14 billion bushels this autumn, allowing for an 8% abandonment rate. That's 355.6 MMT in English money, which would be a whopping 41.6 MMT more than in 2011, an increase of 13% and probably around twice the size of the entire production of Argentina this year.