EU Wheat Closing Comments

Posted by Nogger - a legend in his own mind at 16:17 | Categorized as

07/02/12 -- EU grains finished mixed with front month Mar 12 London wheat up GBP1.35/tonne to GBP169.50/tonne and Mar 12 Paris wheat down EUR0.75/tonne to EUR221.50/tonne.

Paris wheat was mostly down on ideas that recent gains have been overdone, although it closed well off the lows. Consumers are well covered through to the end of March, export interest is minimal and with London futures prices pushing GBP170 paper is the only buyer.

"The volume of wheat which has hit the market since prices broke through the £150 mark ex farm has tipped the market to over supplied, with grain now having to be carried off farm into stores to tender on the futures market," said one merchant.

"Traditional spreads between farm grain and the futures have widened as a consequence with a wide North/South price divide appearing," he added.

Extremely cold conditions in Europe seem to be moderating slightly. Black Sea export activity has been hampered by freezing temperatures.

Rusagrotrans say that Russian grain exports in January were less than half those in December at 1.36 MMT. They forecast February exports at 1.6-1.7 MMT with March shipments seen recovering to 2.4-2.5 MMT.

Based on those numbers exports will be around 23.6 MMT by the end of March. They think that the full Jul11 to Jun12 marketing year potential for grain exports is 27-28 MMT, leaving around 1.5 MMT/month left to ship in the Apr/Jun closing quarter of the season.

The trade is expecting a bullish WASDE report on Thursday, but will not be underestimating the USDA's capacity to spring a surprise. That maybe encouraged a bit of book squaring and profit-taking on Paris wheat today.

Looking further ahead, a Bloomberg survey suggests that US farmers to plant the largest area of corn, soybeans and wheat for the 2012 harvest since 1984 at 226.9 million acres.

A Reuters poll is indicating US corn plantings at 94.2 million acres, up 2.3 million from 2011. Not quite as high as Informa's recent estimate of 94.75 million, but still above the current post war record high of 93.5 million set in 2007.