London Wheat Hits New Highs

16/08/12 -- EU grains finished higher with Nov 12 London wheat up GBP3.50/tonne to GBP198.75/tonne and Nov 12 Paris wheat EUR3.50/tonne firmer to EUR259.75/tonne.

Nov 12 London wheat set a new life of contract high of GBP199.50/tonne, enthused by the news of the re-opening of Ensus coinciding with continued feeling that UK yields, which have got off to a poor start, will decline further as the harvest progresses.

"Harvest of winter wheat started last week with farmers in the South East, South West and Eastern regions making good progress with early maturing varieties such as Cordiale, Diego, Grafton and Soissons," said the HGCA.

"Early yields are highly variable (5-10.8 MT/ha) and come from a small number of crops, predominantly early maturing varieties. Overall the early yields, based on a small number of early harvested varieties, are lower than the 5 year average, but Cordiale and Soissons in particular are not high yielding varieties in the HGCA recommended lists," they noted.

The winter barley harvest is around 85% complete, with yields around the 5-year average of 6.3 MT/ha, they added. Spring barley harvesting is only just underway. The winter oilseed rape crop is some 80% harvested with yields in line with the 5-year average at 3.4-3.6 MT/ha, although well below last season's record 3.9 MT/ha, they concluded.

Strategie Grains raised their forecast for the EU-27 all wheat crop to 133.3 MMT from 131.4 MMT previously and some 0.4 MMT above the USDA's latest estimate. The increase mainly comes from better than expected output from France, Germany and Poland.

The EU-27 barley crop was raised 0.6 MMT to 53.1 MMT which is 0.8 MMT higher than the USDA said last week due to improved production from German, Polish and Danish harvests.

In contrast EU-27 corn production was lowered by a hefty 7.1 MMT to 58.1 MMT, some 3.4 MMT less than the USDA's estimate. "Maize development has been severely impacted by the hot, dry weather in central and southern Europe," they said.

Elsewhere SovEcon said that Russia's Aug 1st grain stocks are at their lowest levels since 2006, with on-farm Aug 1st wheat stocks of 10.61 MMT the lowest since 2003.

Russia formally joins the WTO on Aug 22nd. There aren't many that would currently bet against a grain export embargo following within a month or two at the most.