Nogger's Blog

19/07/11 -- EU grains finished with Nov London wheat GBP3.90/tonne higher at GBP165.90/tonne and Nov Paris wheat EUR6.00/tonne firmer at EUR201.50/tonne following US markets higher.

Heat and dryness concerns in the US Midwest and Plains sent Chicago higher, with EU markets following suit.

The USDA reported a fall in US corn and soybean crop conditions overnight, with spring wheat good/excellent unchanged. Spring wheat crop development is however way behind normal with only 60% of the crop headed compared with 88% on average.

Customs data shows that UK wheat exports fell to a marketing year low of 75,200 MT in May, although the strong pace of early exports means that we've still shipped out 2.5 MMT in 2010/11.

Egypt have agreed to add Ukraine back onto it's list of approved wheat suppliers, further diminishing the prospects of EU or US wheat getting a look in with any tenders there for the foreseeable future.

The Chicago markets are concentrating on America's weather problems, rather than focusing on the bigger picture to my mind, and for now EU wheat is following what is happening across the pond.

The big picture shows that US and EU wheat was already well over-priced relative to that coming out of the Black Sea, so today's rises are hardly going to improve the situation any.

Every compounder in the UK that I am talking too is bemoaning how slack demand for feed is and how wheat just seems to be pricing itself out of the ration. That's all well and good if there's strong export demand for it, but there isn't, UK/EU wheat is priced out of that market too.

Whilst producers busy themselves with harvesting then I guess that they can ignore these issues for now.

Elsewhere alarm bells are ringing, EU and US debt problems haven't gone away. On a separate note Goldman Sachs reported a slump of 18% on Q2 revenues and the Bank of America reported a Q2 net loss of USD8.83 billion versus a profit of USD3.12 billion a year previously - the largest quarterly loss in the bank's history.