EU Wheat Starts Week Modestly Higher

EU wheat futures began the week modestly higher Monday, with March London wheat closing GBP0.75/tonne higher at GBP93.20/tonne, and Paris March milling wheat ending up EUR0.25 at EUR122.50/tonne.

Farmer reluctance to sell is certainly a contributing factor at the moment now that EU futures have fallen below EUR125/tonne and UK ex farm levels are well ensconced in the GBP80's.

Although the fundamentals haven't really changed, we are still looking at large stocks and fierce competition from the FSU/Black Sea area, EU growers seem largely prepared to sit tight and hope for better times ahead.

There are plenty of question marks over currency fluctuations, with the euro enjoying a temporary (?) boost from a slight easing of Greek bailout fears. The pound looks far from comfortable either, with massive UK government borrowing and a election looming.

Defra appear to have clearly underestimated the level of UK wheat imports this season, whilst they have also probably overstated the size of our exports. That might add a further half a million tonnes to the UK carryout this season.