EU Wheat Closing Comments

March London wheat ended GBP0.80 higher at GBP94.55/tonne, and March Paris wheat closes EUR0.25 higher at EUR125.50/tonne. Hardly what you might call a key reversal, but any higher close has been a rarity of late, particularly for London wheat, which posted only it's eighth higher close for the year out of thirty six trading sessions.

A sharply firmer US market following their long weekend, helped get wheat off onto a positive footing from the outset. Firmer crude oil, equities and other outside market strength also spilled over a little into grains today.

There seemed to be a little bit more optimism around today in general, aided by recession busting results from Barclays. UK inflation came in above 3%, but that was what was expected, that will require another letter of explanation from Mervyn King to Alistair Darling to explain why.

All eyes are now on the details of EU finance ministers' aid package for Greece.

Whilst European winter wheat plantings are seen slightly higher, along with those in Russia and many of the FSU countries, plantings elsewhere are seen lower. US farmers have already cut winter wheat seedings by 14% (although they may partially compensate for that by planting a bit more spring wheat), Canadian farmers too are expected to cut sowings significantly on the Prairies. In the southern hemisphere where the harvest has only just finished Argentine and Australian farmers are also expected to throw in the towel on wheat and look for alternatives.

That can't do any harm in the long run, but any significant recovery in prices will be hindered by the weight of existing northern hemisphere stocks.