London Wheat Rises On Production Jitters

November London wheat closed the day GBP1.15 higher at GBP107.40/tonne, with November Paris milling wheat EUR0.25 easier at EUR141.00/tonne.

After the long hard winter, a cool and dry spring isn't really what the doctor ordered. Temperatures have moved up the past day or two, and are forecast to bump up into the low to mid 20's by the end of the week, but there isn't much rain around.

What rain will fall in the UK is likely to be in the west, not where the bulk of the country's wheat producing areas are (or rapeseed for that matter).

France is also dry, yet strangely further east too much rain seems to be the problem (see here).

EU wheat was also underpinned by the weakness of the pound and euro on the forex markets. Inflation here is rising, contrary to BoE and ECB forecasts, that might prompt some to think that food commodities are a good anti-inflationary investment.

Certainly it looks like a decent bet that the pound and euro will continue to move lower against the dollar for the remainder of 2010. That shouldn't do EU export prospects too much harm.

The Black Sea will however inevitably be very aggressive marketeers once again, as soon as their new crop harvest kicks in just a few months away.