EU Wheat Closing Comments

May London wheat ended GBP0.75 higher at GBP103.50/tonne, May Paris wheat closed down EUR3.25 at EUR130.75/tonne. Besides front month London wheat, all other contracts finished lower.

Rain in the past week or so across parts of the UK, France and Germany appear to have alleviated dryness concerns for now. Cold is more of a worry, with much lower than normal temperatures on the cards for the rest of the week across almost all of northern and western Europe.

The USDA are out tomorrow with their first estimates of 2010/11 world wheat production. Their agricultural attaché last week forecast EU-27 wheat production for the coming season at 144.5 MMT (from 138.9 MMT in 2009/10), with barley output at 59 MMT (from 61.5 MMT).

Paris wheat took a knock as the euro recovered somewhat from it's recent extreme weakness as EU finance ministers announced a EUR750 billion facility (on top of the EUR110 billion already allocated to Greece) to help indebted eurozone member countries.

The pound had another volatile day, popping up above 1.50 against the dollar at one stage. It was however back under pressure late in the day on reports that all was not going well in coalition talks between the Lib-Dems and Conservatives.

It will be interesting to see how the markets react tomorrow to breaking news that Gordon Brown is to quit as Labour leader to facilitate a surprise Labour/Lib-Dem alliance.