Nogger's Blog

11/05/12 -- EU grains finished mixed with May 12 London wheat finishing down GBP1.25/tonne to GBP172.50/tonne, and new crop Nov 12 falling GBP0.30/tonne to close at GBP148.20/tonne. Aug 12 Paris wheat ended EUR3.75/tonne lower at EUR197.50/tonne, whilst Nov 12 was EUR0.75/tonne firmer at EUR196.25/tonne.

On the week as a whole May 12 London wheat gained GBP0.25/tonne and Nov 12 lost GBP1.30/tonne to close the week at its lowest since February. Nov Paris wheat was EUR0.50/tonne higher on the week.

EU wheat still looks expensive relative to its US counterpart. Benchmark new crop month Jul 12 Chicago wheat closed below USD6/bushel for the first time in the contracts life today, and trading in that began in August 2009.

EU wheat exports will slump to their lowest levels in five years in 2012/13 the USDA said yesterday. At 14.5 MMT they will be down 12% down on this season and 37% lower than last year, they forecast.

The weak euro is helping to support Paris wheat a little, with sterling briefly breaking through the 1.25 level for the first time since Nov 2008 today. Even so EU exports aren't exactly flying out of the door. Brussels issued 176 TMT of soft wheat export licences this week, bringing the marketing year to date total to 11.65 MMT, 32% down on year ago levels.

April rains have replenished soil moisture deficits in the UK, France and western Germany. FranceAgriMer rate 65% of the French wheat crop in good/excellent condition. The French body also raised their estimates for wheat and corn 2011/12 carryover yesterday due to lower exports than anticipated.

Commodities in general were under pressure today following the announcement that America's largest bank, JPMorgan Chase, has suffered losses of "at least" USD2 billion due to a risky hedging strategy. That may lead to calls for tighter regulation on speculative activity in the grains market.