EU Wheat Closing Comments - Tuesday

14/08/12 -- EU grains ended mixed with Nov 12 London wheat up GBP0.60/tonne to close at GBP195.00/tonne and with Nov 12 Paris wheat EUR2.25/tonne easier at EUR255.00/tonne.

London wheat continues to punch above it's weight, with Nov 12 closing within GBP1.00/tonne, or 0.5%, of the lifetime closing contract high. By contrast Nov 12 Paris wheat finished the day EUR14.75/tonne, or 5.5%, below its lifetime closing high.

As far as UK wheat supply and demand situation is concerned the big news of the day was the announcement that Ensus is to re-open after a 15-month shutdown.

Early UK wheat harvest results continue to be mixed, with Farmers' Weekly reporting that 75% of milling wheats coming into one Kent storage facility are failing to meet the required specification.

The Ukraine government estimate this season's grain crop at 45.0 MMT, down more than 20% on last year. Of that total wheat will account for 16.3 MMT versus 22.6 MMT in 2011, they add.

Private analysts are more pessimistic, estimating total grain production at 40.0-42.6 MMT, with wheat output around 13.6-14.0 MMT.

Looking ahead, the Ukraine Ministry estimate winter grain plantings at 8.2 million ha versus 8.4 million in 2011. Wheat sowings are seen down marginally to 6.6 million ha.

Recent heavy rains are seen as likely being beneficial to developing Ukraine corn and sunflower crops, plus early planted winter rapeseed.

Having been out of the market since April, Egypt was back with a second tender in a week, buying one cargo each of Russian and Ukraine wheat for September shipment. The Russian wheat was priced up around USD3.50/tonne cheaper than their weekend purchase.