EU Grains Close

16/05/11 -- EU grains closed mostly higher with May London wheat unchanged at GBP197.00/tonne and with new crop Nov up GBP2.50/tonne to GBP177.75/tonne. Nov Paris wheat rose EUR3.00/tonne to EUR228.70/tonne whilst May12 was EUR3.25/tonne higher at EUR232.50/tonne.

In London old crop prices remain depressed following the news late last week that Ensus was to close for 2-4 months as producing bioethanol from wheat isn't economically viable at these levels.

The fact that they've decided to take such action little more than a year after opening a plant that cost GBP300 million to build is particularly interesting. What does this signal to similar other under construction, and planned, projects in the UK and elsewhere?

The old crop/new crop Jul/Nov spread has now narrowed from GBP37.00/tonne to under GBP10.00/tonne in less than four weeks.

Concerns over continued dryness in the South East of England, France and Germany seem particularly likely to harm rapeseed and spring barley yields. Paris rapeseed closed EUR6.50/tonne higher in new crop August, having now risen by more than EUR50.00/tonne from a low set only eight sessions ago. Aug malting barley closed EUR13.50/tonne higher, up EUR33.00/tonne in the last eight trading days.

France only got 29% of normal rainfall during April, with Germany faring little better at 38% of average during the month. Whilst there are showers in the forecasts for Germany tonight and tomorrow the remainder of the week is seen dry. In France there are no significant rains in the offing for the next two weeks.