EU Wheat Closing Comments

EU wheat futures closed mixed with London wheat ending with March down GBP1.10 at GBP96.05/tonne, Paris march wheat closed EUR0.50 higher at EUR126.00/tonne.

The market was heavily influenced by the fortunes of the euro today, which fell out of bed falling below 1.36 against the dollar at one point, on news that an EU deal for Greece did not include any financial assistance.

The pound gained close to 1.15, which weighed on London wheat as it obviously makes UK wheat less competitive on the export front against EU grain.

Some reports of winterkill in Ukraine might be supportive, once the crop emerges from winter dormancy and we have a better idea of what magnitude of production losses may have occurred.

A lack of farmer selling at current level is noted, with EUR125/tonne a psychologically difficult barrier for Paris wheat to break.

In the UK, ex farm levels sub-GBP90/tonne are also failing to tempt too many producers into parting with wheat.

Withdrawing from selling is about the only weapon left in farmers' armoury at the moment, with an increased EU acreage already in the ground. The French government yesterday raised their 2010 grain acreage estimate to 7.137 million hectares from 6.976 million last year.

India has agreed to export wheat to Nepal, that appears to indicate that the government there are confident that this season's harvest, which begins next month, will yield the 82 MMT that they have been aiming for.