EU Grains Closing Comments

Nov London wheat closed GBP3.25 higher at GBP132.75/tonne; Nov Paris wheat ended up EUR3.75 at EUR178.75/tonne. Futures posted significant gains but also closed below session highs.

Nov Paris corn finished EUR4.50 higher at EUR168.25/tonne; Nov Paris rapeseed advanced EUR3 to EUR367.75/tonne; Nov Paris malting barley closed up EUR0.75 at EUR186.75/tonne.

Nov London wheat rose to a fresh 13 month high of GBP137/tonne at one point as "smart investment money" continues to flow into the market. Although end-users are largely still sitting on their hands, they are becoming rather spooked to say the least by the swiftness and magnitude of this recent price spike.

More imminent production cuts look likely to be on the cards for Russia, whilst output in Kazakhstan may well also fall below current estimates.

The German Farmers' Union Deutscher Bauernverband (DBV) helped to keep the pot boiling by saying that wheat yields there are likely to be 10-20% down on last year.

The Ukraine Ministry forecast 2010/11 wheat exports 27% lower than last season at only 6.7 MMT.

Algeria bought 300,000 MT of option origin wheat yesterday, which is likely to be fulfilled by French grain. Although our mates Egypt bought Russian wheat again this week, it was at least almost USD50 up in price on a few short weeks ago. They may find that the Russian (and Kazakh) shops are shut come the new year.

So there you have it, lots of bullish news to get your teeth into.

Normally shy and reticent UK farmers are apparently falling over themselves to sell wheat at these prices, and I don't blame them. Pretty much the only buyers are the City boys who probably haven't even started shaving yet, or kissed a girl, let alone seen a field of wheat.

It has to be worth noting that the differential between front month August Paris wheat and November finished at almost EUR22/tonne tonight. That's rather a large differential for only three months isn't it? The two month difference between Nov and Jan is just EUR1.25/tonne, that's a very striking disparity.

The fresh-faced young batty boys with the braces aren't buying August you see, that's far too nearby for comfort. They prefer the safety zone of four months away November, for now. Tarquin and his mates will start shaking like a flatpack MFI wardrobe in a force nine gale as November approaches however. After all they don't want 100,000 MT of wheat turning up at Canary Wharf do they?