New All Time Highs For Surging London Wheat

Posted by Nogger - a legend in his own mind at 08:33 | Categorized as

07/11/12 -- London wheat continues to post all-time historic highs, with May 13 having touched GBP226.50/tonne before closing at GBP226.35/tonne today. At the end of the day Nov 12 London wheat closed GBP3.50/tonne higher at GBP220.75/tonne - the highest front month close ever - and with Nov 12 Paris wheat ending EUR2.00/tonne firmer at EUR276.00/tonne.

Nov 13 London wheat also hit a fresh contract high of GBP193.50/tonne, and that's where it ended the day, for a net gain of GBP1.25/tonne.

In the past month front month London wheat is up 11%, versus a Paris wheat increase of 6.6% and a Chicago wheat improvement of only 4.1% as of 7pm London time.

The poor quality and yield of this season's harvest means that UK wheat imports will need to reach 2 MMT this year, according to ODA, which is a bit higher than the HGCA's recent 1.7 MMT estimate although in line with other trade forecasts. That would be more than double last season's UK wheat imports.

The trade is now looking ahead to Friday's USDA WASDE report. For wheat there are potential production reductions for Australia (23 MMT in October), Argentina (11.5 MMT) and China (118 MMT).

As far as exports go the trade considers that Australia's figure may be too high (20.5 MMT) along with that of Argentina (7.3 MMT). On the other hand Ukraine's may be too low at only 4 MMT.

There are reports that the Ukraine Ministry may have agreed to increase the permitted 5.5 MMT of wheat exports this season by a further 0.5 MMT. What we do know for sure is that they have exported a record 9.2 MMT of grains so far this season.

In total they expect to export 20 MMT of grains in 2012/13, a reduction of only 8%. Yet the grain harvest there is expected to finish down 19% on last year at 46 MMT, say the Ministry.

This year's harvest has produced 15 MMT of wheat, versus 22.2 MMT last year, along with 16.5 MMT of corn so far, off 81% of the planned corn area. Winter planting is now complete, the Ministry add.

Russia's grain harvest is said to be 98.5% complete at 72.9 MMT, with the wheat harvest 99% done at 39.6 MMT in bunker weight versus 56.2 MMT in clean weight a year ago. Winter grain plantings in Russia are said to be 93% done.

Lebanon bought 50 TMT of wheat in a tender yesterday, shared 50:50 between Ukraine and Russia, proving that neither are quite out of the market just yet. That however is surely only a matter of time.