EU Wheat Price Movements Getting More Erratic

17/02/12 -- EU grains finished higher with Mar 12 London wheat up GBP1.00/tonne to GBP164.00/tonne and Mar 12 Paris wheat climbing EUR4.50/tonne to EUR217.25/tonne.

On the week overall front month London wheat fell GBP1.00/tonne, yet Mar 12 Paris wheat rose EUR6.75/tonne. In another curious move the gap between Mar 12 and May 12 London wheat has widened from being a GBP1.75/tonne premium a week ago to one of GBP4.00/tonne at the close of play today.

You could say that this reflects the lack of physical interest in the nearby position. Yet in stark contrast Mar 12 Paris wheat has gone from being a EUR4.00/tonne premium over May 12 a week ago to one of EUR7.50/tonne today.

Ukraine appears to have set some kind of voluntary cap on wheat exports for the remainder of the season, which will likely limit them to no more than 5.0 MMT, which is 1 MMT less than the USDA currently estimate.

Russia will be back in the export market as soon as weather conditions improve is what some are saying, although they were curiously absent from yesterday's Egyptian tender - and that was for April shipment.

Maybe there's one last shot at some "technical tightness" for those still sitting on their hands with wheat to sell, looking enviously at GBP200/tonne in their tractor rear view mirrors? We shall see, I wouldn't set my sights too high though as there is potentially a tidal wave of new crop on the way.

The EU-27 wheat crop is seen 3% higher in 2012, carryover into 2012/13 will also be increased as exports currently lag last season's levels by more than a third.

Last week the USDA forecast an increase in US winter wheat acres of 30% to just under 42 million acres, harvesting of that begins in just three months.

India will begin harvesting a record wheat crop of it's own in a matter of weeks.

Meanwhile Agriculture and Agri-Food Canada say that growers there will plant 24 million acres of wheat for the 2012 harvest, up 14% from 21.1 million in 2011. Rapeseed plantings will also jump 7% to a record 19.8 million acres, they estimate.