EU Wheat Close

25/01/11 -- EU wheat futures closed mostly flat to higher Tuesday after trading lower for much of the day. Mar London wheat was unchanged at the close of play at GBP201.00/tonne and new crop Nov was also flat at GBP172.50/tonne. Paris wheat saw Mar rise EUR1.25 to EUR262.50/tonne and Nov EUR2.25 higher at EUR231.25/tonne.

It was a rather choppy session heightened by the surprise news that UK GDP fell in the last quarter of 2010, contrary to expectations of a rise. The pound immediately fell sharply, dipping as low as 1.5850 against the dollar and 1.1565 against the euro, before recovering slightly by the close.

The news would certainly seem to indicate that ideas of a rise in interest rates here as early as the summer may now be on hold.

"Large scale" social unrest in North Africa has now spread to the Arab world's most populous country and the largest wheat buyer on the planet - Egypt. Cynical it may be, but the market seems to be thinking "hang on a minute, the likes of Algeria and Tunisia are tackling this by buying more wheat - suppose Egypt does that too?"

Australia's wheat crop is currently said to be 62% milling grade (versus 86% a year ago), making it 38% feed grade (from 14% last season). Spain are said to be interested in buying Australian feed wheat if EU import tariffs allow it.

EU rapeseed also had a volatile session, with front month Feb falling sharply in early trade - for the second session running - before also recovering much of those early losses by the end of the day. At one stage Feb was down almost EUR20/tonne since Friday.