EU Wheat Dragged Higher By Surging Soybeans

28/02/12 -- EU grains finished mostly higher with front month Mar 12 London wheat up GBP1.00/tonne to GBP165.00/tonne and Mar 12 Paris wheat rising EUR4.00/tonne to EUR210.00/tonne.

Surging US soybean prices supported the entire market today, with front month March breaching the USD13/bushel level for the first time since September in overnight trade, dragging corn and wheat with it.

That strength spilled over into lacklustre European trade, despite the lack of a real bullish story for wheat. Reduced South American corn production is about as bullish as it gets, and even though it's below early expectations Brazil's corn crop could still be a record.

The Russian Ministry upped their 2011/12 grain export estimate to 27-28 MMT. That revision seemingly reflects optimism over the condition of winter crops and hopes that spring plantings will get underway in a timely manner and that prospects are favourable.

Ukraine looks set to carryover 14.6 MMT of grain into 2012/13 "which will create considerable difficulties providing a reduction in grain prices," according to the APK Inform Agency there. That's around double the normal volume.

Canadian spring plantings are expected to be sharply higher this spring, with Louis Dreyfus forecasting a 12.6% leap in rapeseed sowings to an all time high of 21 million acres.

Agriculture and Agri-Food Canada recently said that growers there will plant 24 million acres of wheat for the 2012 harvest, up 14% from 21.1 million in 2011.

As well as forecasting higher wheat production in the EU for 2012/13 yesterday, the European Commission also said that ending stocks here would increase by more than 50% to 15.1 MMT at the end of next season.