Grain Update – 19 May 2011

European milling wheat futures yesterday jumped to three-month highs as the worst drought for decades dashed hopes for increased output in the world's largest grain-producing region for the 2011/12 season. With every day that passes there are increasing concerns about the effect that the current dry spell is having on crop development. A number of analysts are forecasting that the current drought will have a devastating effect on yields given that the main areas affected:Germany, France, the U.K. and Poland combined account for more than 2/3rds of the EU’s wheat production.

French analysts Strategie Grains, despite a 2% increase in area,have downgraded French wheat production to under 35mt while Agritel forecast a harvest of less than 32mt. This latter figure would represent a 13% drop on the average yield. Meanwhile in Germany initial estimates suggest that wheat production will fall by at least 8% to under 41mt as crops in thy North Eastern region have been very badly affected.

European meteorologists are forecasting higher temperatures for the remainder of May with modest amounts of rainfall over France and Germany for this coming weekend. In France many local authorities are imposing restrictions on the amount of water that can be extracted to irrigate crops. In the UK plans are being drawn to allow for limited crop irrigation should the situation deteriorate further.

Meanwhile in the Northern US plains such as Minnesota and Dakota right up into Canada wet weather is delaying spring wheat sowings, this will have implications for both yield and quality. All in all current indications are that wheat production for the 2011/12 will be inadequate to replenish diminishing milling wheat stocks.

A significant weather premium continues to develop in the market as is evident from today’s EU futures prices for milling and feed wheat and maize compared to last Friday’s close. To date new crop feed wheat for November is up st£8, with milling wheat for November €16.25 and new crop French maize + €11/t.

Prices - 19/05/11 / Feed Wheat Futures
Delivery / Time / Last / +/- / Open / High / Low / Settl.
(CET)
2011 May / 11:00 / 205 / 6 / 205 / 205 / 205 / 199
2011 Jul / - / - / - / - / - / - / 195
2011 Nov / 13:23 / 197 / 6 / 193.5 / 199.25 / 193.5 / 191
2012 Jan / - / - / - / - / - / - / 192.5
2012 Mar / 10:51 / 200.75 / 6.75 / 200.75 / 200.75 / 200.75 / 194
2012 May / 10:39 / 200 / 4 / 200 / 200 / 200 / 196
2012 Jul / - / - / - / - / - / - / 197.3
2012 Nov / 13:10 / 170 / 3.5 / 167 / 173 / 167 / 166.5
Prices - 19/05/11 / Milling Wheat Futures
Delivery / Time / Last / +/- / Open / High / Low / Settl.
(CET)
2011 Aug / - / - / - / - / - / - / 240.5
2011 Nov / 13:24 / 249.5 / 7.5 / 245 / 251.5 / 244.75 / 242
2012 Jan / 13:14 / 250.75 / 7.75 / 246 / 252 / 246 / 243
2012 Mar / 13:17 / 251 / 6.75 / 247 / 253 / 247 / 244.25
2012 May / 13:08 / 252.75 / 7 / 245 / 254 / 245 / 245.75
2012 Aug / - / - / - / - / - / - / 240.75
2012 Nov / utures / 226 / 2 / 224 / 226.5 / 224 / 224
Prices - 19/05/11 / Maize Futures
Delivery / Time / Last / +/- / Open / High / Low / Settl.
(CET)
2011 Jun / 13:13 / 240 / 2 / 240.75 / 241 / 239.5 / 238
2011 Aug / 11:50 / 243 / 3 / 242.5 / 243.5 / 242.5 / 240
2011 Nov / 13:14 / 221.75 / 2.25 / 220.5 / 223.75 / 220.5 / 219.5
2012 Jan / 13:14 / 224.25 / 1.5 / 224.5 / 226.25 / 224 / 222.75
2012 Mar / - / - / - / - / - / - / 224.5
2012 Jun / - / - / - / - / - / - / 234.25
2012 Aug / - / - / - / - / - / - / 234.25

Table 1: Weekly Futures LIFFE Wheat Settlement Prices

LIFFE Wheat (UK) / £ per Tonne
Contract / 25-Mar-11 / 01-Apr-11 / 08-Apr-11 / 15-Apr-11 / 22-Apr-11 / 29-Apr-11 / 06-May-11 / 13-May-11 / Change on week
2011 May / 197.25 / 199.5 / 206.75 / 207.00 / 210.00 / 205.00 / 198.00 / 197.00 / -1.00
2011 Jul / 197.5 / 201.5 / 205.50 / 204.00 / 210.00 / 202.50 / 194.00 / 187.00 / -7.00
2011 Nov / 161.75 / 167.5 / 169.50 / 164.50 / 177.40 / 169.65 / 168.75 / 175.25 / 6.50
2012 Jan / 163.25 / 170.5 / 172.50 / 166.50 / 179.40 / 171.75 / 169.75 / 178.75 / 9.00
2012 Mar / 165.75 / 173.5 / 176.00 / 167.50 / 180.40 / 173.75 / 172.50 / 180.50 / 8.00
2012 May / 166.75 / 174.5 / 177.50 / 170.75 / 184.40 / 177.65 / 176.25 / 181.50 / 5.25
2012 Jul / 169.85 / 177.95 / 184.70 / 174.75 / 189.00 / 180.60 / 179.20 / 183.30 / 4.10
2012 Nov / 147.5 / 150.5 / 154.00 / 149.00 / 158.25 / 153.75 / 154.00 / 158.50 / 4.50
Table 2: Weekly Futures MATIF Wheat Settlement Prices
MATIF Wheat (France) / Euro per Tonne
Contract / 25-Mar-11 / 01-Apr-11 / 08/04/2011 / 15-Apr-11 / 22-Apr-11 / 29-Apr-11 / 06-May-11 / 13-May-11 / Change on week %
2011 May / 236.75 / 239.75 / 247.25 / 238.25 / 252.25 / 247.00 / 240.00 / Closed
2011 Aug / 205 / 208.75 / 216.00 / 207.00 / 221.00 / 215.50 / 208.50 / 230.00 / 21.50
2011 Nov / 207 / 212.75 / 215.00 / 208.00 / 224.75 / 214.00 / 212.75 / 225.75 / 13.00
2012 Jan / 208.25 / 213.25 / 215.25 / 209.00 / 225.75 / 215.00 / 214.00 / 227.50 / 13.50
2012 Mar / 209.5 / 214.5 / 216.75 / 210.50 / 227.25 / 216.25 / 215.25 / 228.00 / 12.75
2012 May / 210.5 / 215.5 / 216.25 / 211.00 / 229.25 / 217.25 / 216.50 / 229.25 / 12.75
2012 Aug / 193 / 203 / 204.25 / 204.50 / 223.75 / 208.25 / 207.75 / 223.25 / 15.50
2012 Nov / 192.75 / 199 / 201.75 / 195.00 / 209.50 / 201.25 / 202.00 / 215.75 / 13.75
Table 3: Weekly Futures MATIF Maize Prices
MATIF Maize (France) / Euro per Tonne
Contract / 25-Mar-11 / 01-Apr-11 / 08/04/2011 / 15-Apr-11 / 22-Apr-11 / 29-Apr-11 / 06-May-11 / 13-May-11 / Change on week %
2011 Jun / 224.25 / 234.75 / 238.25 / 236.00 / 239.75 / 234.50 / 229.75 / 231.75 / 2.00
2011 Aug / 226.25 / 236.5 / 240.00 / 237.25 / 241.25 / 236.50 / 231.00 / 234.00 / 3.00
2011 Nov / 200.5 / 204 / 205.50 / 202.25 / 210.75 / 205.50 / 201.75 / 208.50 / 6.75
2012 Jan / 203.25 / 205.5 / 207.75 / 205.25 / 212.00 / 208.25 / 204.25 / 212.00 / 7.75
2012 Mar / 204.75 / 207 / 208.25 / 205.75 / 213.75 / 211.25 / 207.00 / 215.50 / 8.50
2012 Jun / 201.25 / 206.25 / 206.75 / 201.25 / 211.50 / 208.50 / 212.50 / 225.25 / 12.75
2012 Aug / 201.25 / 206.25 / 206.75 / 201.25 / 211.50 / 208.50 / 212.50 / 225.25 / 12.75