EU Wheat Maintains Upwards Trajectory
03/01/12 -- EU grains extended their recent gains with Jan 12 London wheat climbing GBP3.05/tonne to GBP155.30/tonne, Jan 12 Paris wheat rising EUR2.50/tonne to EUR209.00/tonne.The rest of the EU grains complex also posted strong gains with corn and rapeseed both up EUR6.75/tonne nearby.
For London wheat this was the straight sixth up day during which time it has risen GBP10.80/tonne, or 7.5 percent. Paris wheat has now been up for 11 of the past fourteen sessions and has now risen 17 percent since the last day of November.
It's not particularly demand for wheat, or even damage to developing wheat, that is behind this rally. It's the developing drought in South America damaging corn and soybean production there.
The trade is now talking a Brazilian soybean crop some 3 MMT or so below the current USDA estimate and a Argentine one of around 4 MMT less than the USDA predict. Corn production potential in the latter is thought to be as much as 6 MMT lower than the USDA's 29 MMT estimate.
Even so losses of this kind of magnitude are hardly critical. A 23 MMT Argentine corn crop would still be only 0.3 MMT away from being the highest in history.
What is more important right now is how does the trade perceive these losses, and if they will be the catalyst to encourage fund money back into the grains sector in the New Year we now find ourselves in.
