EU Grains Close

16/05/12 -- EU grains finished mixed but mostly higher with May 12 London wheat ending down GBP0.50/tonne to GBP173.00/tonne, and new crop Nov 12 up GBP2.70/tonne to close at GBP152.00/tonne. Aug 12 Paris wheat ended EUR3.75/tonne higher at EUR201.25/tonne, whilst Nov 12 was also EUR3.75/tonne firmer at EUR203.25/tonne.

Wheat was mixed throughout the morning, but headed higher in afternoon trade after the Chicago market came in stronger. That push higher was linked to reports of potential crop damage in Russia due to high temperatures and scant rainfall.

There is some trade talk of similar problems in Ukraine, although several commentators on the ground over there refer to crop conditions bordering on "perfect" - at least in the west of the country.

US wheat ratings in the top producing state of Kansas were downgraded sharply by the USDA on Monday, no doubt raising a few eyebrows amongst the heavily short fund fraternity.

A late and unconfirmed story appearing via Twitter that Strategie Grains will tomorrow cut it's EU-27 soft wheat production forecast by more than 4 MMT to 122.7 MMT may have been behind the strength in new crop months.

They cut their soft wheat estimate last month by a chunky 4.3 MMT to 126.8 MMT citing frost and drought damage, so this potentially pegs things well below what the market was expecting just a couple of months ago.

Iraq bought 400,000 MT of wheat of various origins, said to be a combination of Russian, Romanian, Kazakh, Australian and US wheat in a tender yesterday, adding support.

European debt worries appear to have been placed on the back burner, at least for today, but don't be surprised to see them retake centre stage at any time.

Meanwhile UK wheat exports in March slumped to a nine month low of less than 125 TMT customs data shows, and that was with the added bonus of a 47 TMT consignment shipped to the US. The latter is thought to have been sold around eight months or so ago, UK wheat is currently priced out of the export market and looks likely to remain so now until new crop comes along.