EU Wheat Little Changed At The End Of A Volatile Week

Posted by Nogger - a legend in his own mind at 12:15 | Categorized as

06/01/12 -- EU grains reversed some of yesterday's losses to close with Jan 12 London wheat up GBP1.00/tonne to GBP151.75/tonne, Jan 12 Paris wheat rising EUR4.25/tonne to EUR201.00/tonne.

At the end of a choppy first week of 2012 there wasn't actually a great deal of overall change - London wheat was GBP0.50/tonne lower and Paris wheat down EUR1.50/tonne.

The EU only issued 106,000 MT of soft wheat for the week to Jan 3rd. That's the lowest weekly total of the 2011/12 marketing year so far. Even allowing for the fact that it was a holiday week it's a pretty poor performance. Cumulative exports now stand at 7.36 MMT, almost 4 MMT down on a year ago.

On a brighter note French wheat accounted for half of the 240,000 MT of the grain that Egypt bought in a tender today. Ukraine wheat also got the nod for one cargo with optional Russia/Kazakhstan origin making up the remainder of the order.

The weak euro, which fell to a fresh 15-month lows against both the pound and the dollar today, seems to be helping EU wheat regain some market share. With the eurozone crisis lurching from one calamity to another the outlook certainly seems to be for further declines for the single currency.

The weather in South America is the other principal factor in the market at the moment with bears pinning their hopes on rain forecast for the second half of next week and into the following weekend. The wheat harvest in Argentina is almost over so weather concerns aren't a factor for that, but corn planting has yet to be completed - and that is what is getting the trade all excited.

The USDA will issue a revised crop production estimate for that next week. They currently stand at 29 MMT but the trade is now suggesting that 24-25 MMT may be nearer the mark, possibly less if next week's rains disappoint.

Also next week the USDA will report on US winter wheat plantings, the trade is expecting those to come in around 2 million acres higher than previously reported.

It's already shaping up to be another volatile week ahead. Spain and Italy will attempt to auction off debt, how well that goes and what yield they have to pay will be closely scrutinised. Weather watchers will be keeping a close eye on developments in South America and then we have the USDA out on Thursday. Chicago corn has posted a limit move for each of the last five years on the day of the January WASDE report.