EU Wheat Mixed But Mostly Higher To Start The Week

Posted by Nogger - a legend in his own mind at 19:28 | Categorized as

21/05/12 -- EU grains finished mixed but mostly higher with May 12 London wheat ending up GBP0.50/tonne to GBP175.50/tonne, and new crop Nov 12 up GBP1.65/tonne to close at GBP160.45/tonne. Aug 12 Paris wheat fell EUR0.25/tonne to EUR212.75/tonne, whilst Nov 12 was EUR1.25/tonne firmer at EUR216.50/tonne.

It was a very choppy session in which London and Paris wheat both opened sharply higher, following the lead of wheat on the electronic Globex market, but then quickly capitulated mid-morning before staging a fightback in afternoon trade.

Nov 12 London wheat had a GBP4.50/tonne trading range on the day, with Paris wheat fluctuating within an EUR8.00/tonne range.

Forecasts for perhaps as much as an inch of rain for hot and dry southern Russia were responsible for tempering early gains, although there is some disagreement over how much rain will be left in storms originating in Central Europe by the time they reach Russia. Eastern Ukraine though should at least get some benefit en-route.

Even so, Ukraine's winter wheat output is now pegged at 10-12 MMT, around half of the 22.3 MMT they produced last year.

Russia's spring planting campaign is around two thirds complete, whilst Ukraine's is almost done according to their respective Ag Ministry's.

The German Statistical Office say that the country's farmers will harvest a 9.5% lower wheat area than they did a year ago, along with 8% fewer barley acres. Winter losses mean that German spring barley plantings are up almost 30% this year, with the spring wheat area jumping more than 180%, although the amount of land given over to the latter is still rather insignificant.

Rabobank are forecasting Paris wheat futures to average EUR200/tonne in Q2, EUR190/tonne in Q3 and EUR180/tonne in Q4 of 2012. Whist those prices are higher than their previous estimates they are all well below current levels.

UK weather conditions are seen improving this week, with temperatures of 25C on the cards by the middle of the week in many places, apart from down the east coast. It will certainly do the crop here plenty of good to get some sun on its back.

Similar could be said of France too, which has had its winter moisture deficit fully restored in the past six weeks.

It's been a quiet start to the week on the Greek crisis front, but trouble is never far away from that quarter it would seem. The pound is off last week's 3 1/2 year highs against the single currency, but a push back up above the 1.25 level seems likely and could come at any time.