London Wheat Ends At Near 17-Month Closing High

Posted by Nogger - a legend in his own mind at 11:48 | Categorized as

14/09/12 -- EU grains ended mostly higher with Nov 12 London wheat GBP2.50/tonne firmer to close at GBP207.00/tonne and with Nov 12 Paris wheat EUR2.25/tonne higher at EUR266.50/tonne.

This was the highest close for a front month on London wheat for almost 17 months. On the week overall though Nov 12 London wheat only managed to add GBP1.05/tonne and Nov 12 Paris wheat EUR1.50/tonne.

The announcement of further QE measures by the US Federal Reserve buoyed the markets in general Friday, with European stocks adding around 1.5-2.0% on the day.

Tunisia bought 50 TMT of optional origin durum wheat overnight, possibly French, for Oct/Nov shipment.

French wheat certainly did win a second share of this week's Egypt business Thursday night, and was shown to now be matching Russian and Ukraine origin wheat on price.

Brussels issued 409 TMT of soft wheat export licenses this week, the best showing since March, although cumulative 2012/13 sales are still lagging last season by 14%, Not so for barley, where this week's total of 206 TMT brings the marketing year-to-date total to 1.65 MMT, an 85% increase on a year ago.

At home, "a sustained period of improved weather" has allowed the domestic wheat harvest to progress to 90% complete, say the HGCA. They say that yields are below average at 7.1-7.4 MT/ha, which would imply a crop of around 14.5 MMT if we take the middle ground using a generally accepted planted area of 2 million hectares.

Specific weights are low, averaging only 65-70kg/ha, they note, meaning that "deductions for low specific weights are common."

Spring barley harvesting is around 70% complete, with spring OSR around 40% done. Spring barley yields are better than expected, although below the 5-year average at around 5.1-5.4 MT/ha. Spring OSR yields are also "on the low side" at an average 2.1 MT/ha, they add.

Now that the harvest in the northern hemisphere is drawing to a close, the market is focusing on how crops in the southern hemisphere are faring.

ANZ Bank estimated Australia’s 2012/13 wheat crop at only 20 MMT, well below the general consensus of 22-23 MMT and considerably less than the USDA's estimate of 26.0 MMT. If accurate, that would be a reduction of almost a third on last year and their smallest crop since 2007/08. That would certainly have a negative impact on Australia's export ambitions in 2012/13, which the USDA currently estimate at 21 MMT.

Australia, which has a domestic wheat consumption of around 7 MMT per annum, was said to have had carryover stocks of 7.7 MMT at the end of 2011/12.

Elsewhere things look a little brighter, Argentina Ag Ministry estimate the 2012/13 wheat crop there at 12.5 MMT versus the USDA's estimate of 11.5 MMT. The Buenos Aires Grains Exchange said that the widely publicised flooding in Argentina has only affected a small proportion of this year's wheat crop.