Nogger's Blog

02/03/12 -- EU grains finished mostly higher with front month Mar 12 London wheat up GBP0.55/tonne to GBP165.30/tonne and Mar 12 Paris wheat rising EUR2.50/tonne to EUR217.00/tonne, putting a EUR6.50/tonne premium between it and May 12.

It's interesting to note that the differential between May 12 and Nov 12 is a hefty GBP15.80/tonne in London, considerably more than the EUR13.00/tonne spread in Paris.

At the end of a choppy week overall Mar 12 London wheat gained just GBP1.05/tonne whilst Mar 12 Paris wheat added EUR9.50/tonne. Euro weakness has something to do with that disparity, with the pound gaining from a touch under 1.18 last Friday to close around 1.20 tonight.

London wheat seems to be developing a sideways pattern, having traded within a fairly narrow GBP163-170/tonne range for the past five weeks. Paris wheat has had a more choppy feel, trading between EUR205-222.25/tonne during the same period.

The market still has to accurately assess winter kill losses caused by the recent cold snap on unprotected crops. One report suggests that parts of eastern and northern France may have lost 5-10% of it's winter wheat.

Russian losses are thought to have been relatively minimal. Ukraine's are more severe, although that is probably more to do with the dry September/November period than the Siberian cold air that moved in last month.

The severe frosts that those weather conditions brought cut Ukraine's grain exports 10% year-on-year to 1.7 MMT last month, with more than three quarters of that being corn. That brings their year-to-date grain exports to around 13.5 MMT, meaning that total 2011/12 shipments are likely to be around 20-22 MMT, considerably less than the government's target of 25-26 MMT.