Nogger's Blog

27/01/12 -- The overnight grains are mixed with wheat a couple of cents lower, beans a couple higher and corn up 3-4 cents.

Egypt rejected a cargo of Kazakh wheat yesterday on the grounds of it containing "unauthorised seeds" and promptly switched another three cargoes bought as Kazakh origin to Russian instead.

It also announced that it only needs to buy another half a million tonnes to see it through to the end of the 2011/12 marketing year.

Demand for wheat is strong, that's what they keep telling us. Yesterday's US export sales were in line with expectations after all. Except "sales" aren't shipments, some could be optional origin for a kick off. Others may never get shipped at all, at least not in this marketing year.

The US carried over more than 2 MMT of outstanding "sales" from last season into this. Meanwhile yesterday's actual shipments fell short of the average level required to hit the USDA's 25 MMT target for the current season. That's the fourteenth week in the past sixteen that this has been the case. How strong a trend do you want?

Meanwhile, yesterday's news that Brussels only issued export licences for 218 TMT of soft wheat in the past week tells a similar story. Thirty weeks into the marketing year the EU has exported only 7.9 MMT, which puts us in line to have shifted a measly 13.7 MMT by the end of the 2011/12 season.

Bear in mind that the bulk of that has gone out early in the season. If we were to continue to ship at the January average from here on in then we'd finish the current season shifting little more than 11.5 MMT.

OK, these are the numbers for soft wheat, not all wheat products that the USDA report on. The fact remains though that soft wheat exports are currently 36% down on last year, and slowing. If we finish up exporting 36% less "all wheat" in 2011/12 then we'll export 14.62 MMT this season, far less than the 17 MMT that the USDA currently have on the world balance sheet.

Incidentally I was speaking to a group of local farmers last night, and happened to mention in my presentation that world wheat stocks were forecast to be at, or near, a record high at the end of 2011/12.

At the ending questions and answers session one farmer asked how accurate are all these stocks figures that we have thrown at us. A very good question. My fellow speaker rightly replied that the USDA is about the best option that is available to us on a global scale so, rightly or wrongly, we kind of have to go with their numbers most of the time.

I said that I'd had it put to me not that long ago, based on the fact that UK exports last season were way ahead of early forecasts and using the stocks numbers that we had at the time, that the UK should have run out of wheat before harvest came along. Indeed somebody allegedly got their fingers badly singed on the back of making the assumption that there wasn't enough domestic wheat to go round using the information available.

Thing is, there was enough wheat. At 200+ quid or whatever, wheat was suddenly and magically "found" all over the place. Could it be that it was not unusual for cereal growers to officially and routinely underestimate the size of their crops I asked, to silence and wry smiles all around the room.

Answers on a postcard please to the usual address...