EU Wheat Closes Higher

EU wheat futures closed higher Wednesday with November Paris milling wheat up EUR1.25 at EUR154.75/tonne, and London November feed wheat up GBP1.00 at GBP130.00/tonne.

The London market has rallied steadily since mid-April as attention begins to focus on sharply lower production prospects in 2009.

Increased consumption from the bioethanol sector is also on farmers minds for new-crop months as many dig their heels in thinking that if they have carried old-crop this far then why not a little longer.

Certainly, with a spread of GBP10/tonne between July and November London wheat it looks like a no-brainer unless you need the cash or the space. I don't have the exact figures to hand, but I wouldn't mind betting that this is the first time in history that we have seen a carry of that magnitude between old and new-crops.

News that Egypt has problems with Russian wheat, having impounded a cargo as "unfit for human consumption" may also provide a little window of opportunity for EU wheat.

Weather problems in the Black Sea persist, with talk of lower yield potential in Ukraine & Russia.

The Argentine crop is going into extremely parched earth after a year-long drought. Plantings are called around 18-20% lower, and the Buenos Aires Grain Exchange now sees the end-2009 crop at just 8.7 MMT. Predictions just a couple of months ago were 15 MMT.