London Wheat Breaks More Records

28/11/12 -- EU grains closed with Jan 13 London wheat GBP1.15/tonne firmer at GBP225.15/tonne, with benchmark May 13 up GBP1.70/tonne at GBP228.70/tonne and new crop Nov 13 up GBP2.95/tonne to GBP198.50/tonne. Jan 13 Paris wheat ended EUR2.75/tonne higher at EUR276.00/tonne.

For London wheat it was fresh contract and historic highs all round, with new crop Nov 13 touching the magical GBP200/tonne mark for the first time in it's history - a level than many growers had said would be sufficient to encourage them to part with some of next season's crop. Volume was also unusually high.

Confusion reigns over how much of the intended 2013 winter wheat crop has been planted here in the UK. Many think only 70%, and some of that of course is unlikely ever to see a combine. Yesterday's AHDB/HGCA Early Bird Survey was more optimistic at 88% or 1.76 million ha.

Even if the latter is correct, and we could achieve a return closer to "normal" yields in 2013 of say 7.5 MT/ha  (although plenty would give you an argument now that we can't), then we'd still end up with a 2013 crop no higher than this year's. At least not without a large wholesale increase in spring wheat plantings.

Based on tonight's closes, old crop UK feed wheat is now around EUR3.00/tonne more expensive than French milling wheat and new crop Nov 13 is running at around parity. What a difference a year makes! A year ago to the day Jan 12 London wheat was around EUR13/tonne cheaper than Paris milling wheat.

The cost of imports looks likely to govern where UK prices go from here. Yesterday Defra increased their 2012/13 UK import projections from 1.7 MMT to just over 2.0 MMT, commenting that "processors are reviewing their requirements on an on-going basis and consequently import levels are challenging to forecast."

As far as availability from our near neighbours in Europe goes, this is more than adequate now but could easily tighten as we get into 2013.

Ukraine's Deputy Agriculture Minister followed the recent trend (few can decide if they are doing this on purpose, or if they really are just plain stupid) by contradicting ideas that some kind of formal or informal wheat export ban will be introduced on Dec 1st. He said that it was "possible to continue exports" without saying how or by what amount.

Most traders seem to think that this is nothing more than a ruse to placate the WTO, but only time will tell. As of yesterday they were said to have exported 5.42 MMT of wheat already this season with a further 382 TMT at port-side waiting to load. They are supposed to have agreed a "voluntary" ceiling with exporters of 5.5 MMT.