EU Wheat Mixed, Exports Drag

16/02/12 -- EU grains finished mixed with front month Mar 12 London wheat falling GBP1.00/tonne to GBP163.00/tonne and Mar 12 Paris wheat rising EUR3.75/tonne to EUR212.75/tonne.

Paris wheat was supported by a sharply weaker euro on signs that the Greek saga is far from over yet. For London wheat this was actually the lowest close for a front month in eighteen trading sessions.

Meanwhile Brussels granted just 47,000 MT of soft wheat export licences this week, easily the lowest weekly total of the marketing year so far, highlighting the uncompetitive nature of EU wheat prices.

That brings the 2011/12 marketing year to date total to 8.4 MMT compared to 13.12 MMT at this time a year ago.

Strategie Grains said that, for all the hype, the recent EU-wide cold snap probably won't have caused any more damage than in a normal year. They peg the 2012/13 EU-27 all wheat crop at 141.5 MMT, 3% up on last year. Barley production is seen at 54.6 MMT and corn output at 62.6 MMT.

They also said that EU exports will be curtailed in the remainder of 2011/12 by the resurgence of US wheat. To emphasize that point Egypt bought 180,000 MT of US wheat in a tender today, passing on more expensive French offers.

In further evidence that EU wheat is pricing itself out, Bloomberg reported that shipments out of France's main export port of Rouen fell 46% in the week ended yesterday - their lowest total in five weeks.

Whilst the futures market continues to hold up well the differential with cash prices is widening, particularly in the north. End-user interest is minimal at these levels.