EU Wheat Volatile

01/02/12 -- EU grains finish mixed after posting strong gains in early trade with Mar 12 London wheat ending down GBP1.40/tonne at GBP167.10/tonne and Mar 12 Paris wheat rising EUR1.25/tonne to EUR216.75/tonne.

The days highs were set early in the session with London wheat jumping GBP4.35/tonne on the Nov12 position at one stage. Mar 12 Paris wheat was up six euros to a seven month high mid-morning.

Short-covering of losing positions seemed to be the order of the day as end users stand aside from a market where London wheat has risen GBP16.35/tonne in just four weeks. Funds were said to have been featured buyers of Paris wheat in the past few sessions.

There is now some talk of as much as 50% of Ukraine's winter cropping area needing to be replanted in the spring, and of a winter wheat crop of no more than 15 MMT at best (from 22 MMT in 2011).

A deep freeze is also slowing up exports from the Black Sea, with Ukraine exporting 1.9 MMT of grain in January, down 27% from December. Russia's exports also shrank markedly last month.

For the July/Jan period Ukraine's grain exports stand at 11.6 MMT, of which more than half was corn, with wheat only accounting for 28%, or 3.3 MMT. Russia has exported just over 19 MMT of grains in the same period, up 80% on last year.

Some reports suggest that a Russian export ban is imminent, with a decision on that likely to be made tomorrow even though we are still 5-6 MMT away from their suggested export maximum.