EU Wheat Closes Slightly Higher

EU wheat futures closed slightly higher Monday in relatively quiet pre-holiday trade.

Paris March milling wheat futures closed up EUR1.75 at EUR128.25/tonne. London May feed wheat closed up GBP0.75 at GBP98.50/tonne.

The devaluation of the Russian ruble, twice in the last three days, keeps Russia hungry for foreign currency. With it's largest grain crop since the early 1990's the country has plenty of grain to export and price is becoming almost secondary.

However, with winter weather closing in, there may be a window of opportunity for European wheat to re-enter the export arena.

The continued weakness of the pound is helping support UK wheat, thank God, because little else is.

Further forward, the EU-27 wheat crop for 2009/10 looks like being lower in virtually all producing countries. Small losses in France and Germany look like being compounded by significantly larger losses in the UK, Spain and elsewhere. Production in the FSU countries like the Ukraine also seems likely to be significantly reduced.

Despite sharply higher global production in 2008, stocks remain historically tight, with lower plantings and yields anticipated in 2009/10, the world still remains vulnerable to a serious weather problem somewhere next year.