EU Wheat Mixed But Shows Decent Gains On The Week

16/03/12 -- EU grains finished mixed with both Mar 12 London wheat and May 12 up GBP0.50/tonne to GBP172.50/tonne and May 12 Paris wheat down EUR0.50/tonne to EUR213.75/tonne.

On the week overall front month Mar 12 London wheat added GBP6.50/tonne and May 12 Paris wheat EUR5.00/tonne. London is clearly punching above it's weight with May 12 now the equivalent of EUR207.00/tonne.

Consumer buyers are thought to only have modest coverage down for the Apr/Jun position, but still seem fairly relaxed about that. Long holders feel that they hold the balance of power, although I seem to recall a similar situation this time last year.

A quick look at the charts shows London wheat topping out at GBP217.50/tonne on Apr 20 in 2011 as far as a closing price was concerned. By Jun 27, little over two months later front month Jul 11 was closing at GBP155.00/tonne, and this was in the face of a drought that had many predicting 25% yield losses.

Once again we appear to have another drought on our hands. Will this one be worse than last year, especially as it is a second time around drought? Only time will tell. There's some rain in the forecast for northern and western areas of the UK on Saturday, pushing into the south east and across the Channel into France, Germany and the low countries on Sunday. A soaking downpour however this rain event isn't said to be.

As things stand, Strategie Grains earlier in the week left their yield estimates unchanged from a month ago on an EU-wide basis at 5.8 and 4.4 tonnes per hectare respectively for soft wheat and barley.