EU Grains Close

10/06/11 -- EU wheat futures closed lower with Jul London wheat down GBP4.00/tonne to GBP192.00/tonne and with new crop Nov falling GBP4.95/tonne to GBP184.45/tonne. Nov Paris wheat was down EUR4.25/tonne to EUR231.25/tonne whilst May12 also fell EUR4.25/tonne to EUR234.25/tonne.

July London wheat was down GBP3.00/tonne on the week, with Nov falling GBP8.55/tonne. Nov Paris wheat fell a more modest EUR3.00/tonne, a sign that new crop London wheat had become overvalued. More than one merchant has commented to me this week that GBP190.00/tonne or better is a clear sell for new crop.

More than one has also commented that wheat here has perked up surprisingly well after the recent rains. Talking of which the outlook is for more of the same going forward. "There's no sign of any real let up in the unsettled theme with low pressure never far away for the foreseeable future, but there will still be some brighter and warmer spells in between the showers," say Metcheck.

Sounds like ideal growing weather to me. Maybe we will get a wheat crop after all?

After Thursday's bullish impetus courtesy of the USDA it has to be said that wheat put in a pretty pathetic performance. Giving up GBP6.00/tonne gains in mid-afternoon to close only forty pence higher yesterday, and now losing almost a fiver today which sets Nov London wheat back to it's lowest close since May 17th.

Contrary to what's been happening in northern Europe, bumper winter and spring rainfall is seen boosting Spain's wheat crop to around 6.5 MMT this year, a 12% increase on 2010 production. Barley output is forecast to rise 10% to 8.95 MMT, making Spain Europe's third largest producing nation after France and Germany, according to the local Cooperatives Agrarias.

The euro wavered as the week has wore on, with the pound rising from a low of 1.1138 on Tuesday to close the week at 1.13 as internal squabbling between EU policymakers and the ECB over debt assistance for Greece sends out the signal that there is a lack of cohesion and consensus over this thorny issue.

In outside markets NYMEX crude oil fell more than USD2.50/barrel on news that Saudi Arabia is to offer more oil direct to Asian refiners, after failing to get OPEC to approve it's proposal to increase production earlier in the week.