EU Grains Close

08/07/11 -- EU grains finished higher with Nov London wheat up GBP3.10 to GBP164.75/tonne and with May climbing GBP2.00/tonne to GBP170.00/tonne. Nov Paris wheat rose EUR4.25/tonne to EUR195.25/tonne whilst May12 climbed EUR3.75/tonne to EUR200.25/tonne.

On the week as a whole Nov London wheat was up GBP4.25/tonne and Nov Paris wheat up EUR7.50/tonne.

Tunisia bought 100,000 MT of optional origin milling wheat in a tender today at prices reported to be USD264.90-268.74/tonne CIF. That's the equivalent of around GBP165.00-167.50/tonne or EUR186.00-188.50/tonne including freight.

Clearly it's not going to be UK, French or German wheat getting delivered at those sort of numbers. Russian and/or Ukraine wheat are the most likely suspects.

The price paid is broadly equivalent to that paid by Egypt for 180,000 MT of Russian milling wheat earlier in the week. At around USD243.50-244.50/tonne FOB that was the equivalent of just GBP152.00/tonne or EUR171.00/tonne ex port.

These striking price differences between EU and Black Sea wheat help explain why Brussels only granted soft wheat export licences for 110,000 in the first week of the 2011/12 marketing campaign. With 780,000 MT of wheat imports during the same period we've suddenly switched from being an exporter to a net importer.

At home the wheat harvest is still some three or four weeks away, heavy and widespread rains across much of the country in the latter half of this week will have everyone keeping their fingers crossed. Especially after British Gas has just reminded us all how expensive energy, and therefore drying charges, are getting.

A wet finish to the season isn't what we need. The BBC are giving an "unsettled" outlook for next week, although providing hope of "an increased chance of seeing high pressure make a return, especially across more southern parts of the UK," for the second half of the month.