Nogger's Blog

31/12/12 -- EU grains closed the month as they spent most of it - lower - with Jan 13 London wheat down GBP1.50/tonne to GBP205.25/tonne, May 13 was also GBP1.50/tonne lower to GBP210.25/tonne and new crop Nov 13 fell a more modest GBP0.30/tonne to GBP186.45/tonne. Jan 13 Paris milling wheat fell EUR1.00/tonne to close at EUR250.25/tonne.

December wasn't a good month for the grains, with heavy fund selling across the pond dragging European markets lower too. Front month London wheat fell GBP18.50/tonne during the course of the month, whilst Paris wheat slumped EUR19.25/tonne. New crop Nov 13 London wheat fared somewhat better, declining by GBP11.05/tonne.

For the record, Paris corn was down EUR15.25/tonne on the front month during December, with Paris rapeseed tumbling EUR20.50/tonne and Paris malting barley down EUR19.00/tonne.

Even with these losses most of the EU grains are still showing healthy price gains year-on-year, with London wheat up GBP53.00/tonne (+35%); Paris wheat up EUR47.74/tonne (+24%); Paris corn up EUR41.00/tonne (+21%) and Paris rapeseed up EUR18.00/tonne (+4%). Only Paris malting barley shows a price decline versus 12 months ago, down EUR12.50/tonne (-5%).

Fresh news was scarce and volume predictably light on the last day of 2012 with many participants taking the opportunity to extend their festive break a little. Concern over the US fiscal cliff issue running right to the wire are keeping traders nervous and discouraging the establishment of fresh longs heading into year-end.

Whether that changes and it's a case of new month, new year, new money when the markets re-open we will have to wait and see, although it may be worth noting that EU grains have developed a habit of closing higher on the first day of trading in a new year recently (certainly that has been the case in each of the last four years).

"Welcome rain and snow fell in the southern Great Plains on New Year's Eve that will benefit hard red winter wheat. The 0.78 inch of moisture received in December compares to 3 inches all together in the fall, September-November, in the top bread wheat states," says Martell Crop Projections.

"Quiet weather is expected to follow in early January with no important precipitation in the Great Plains, Midwest or Mid South. Temperatures are expected to warm strongly in early January in the Upper Midwest," they add.

Closer to home "Recent warmer weather across Europe has melted much of the snow pack that had developed early in December. Snow cover is now limited to eastern Romania and Bulgaria, with most major wheat and rapeseed areas snowfree.

"With warm weather expected to continue across the region over the next 10 days, snow cover will remain very limited across Europe. This will leave the wheat and rapeseed crops vulnerable to any future winterkill threats," say MDA CropCast.

Iraq are using this latest break in prices as an opportunity to buy wheat, issuing a new tender to purchase at least 50 TMT although they will probably buy significantly more. The US, Canada, Australia, Russia, Romania, Kazakhstan, Ukraine and Germany are the preferred countries of origin in the tender which closes on Jan 13.