EU Wheat Close

Nov London wheat closed GBP4.85 lower at GBP156.45/tonne, with Nov Paris wheat EUR9.75 easier at EUR210.75/tonne.

It was London wheat's lowest close since the 2nd September and Paris wheat's worst since the 20th August. It seems that the weight of speculative longs in the nearby positions is finally beginning to tell.

Whilst the market hasn't suddenly turned massively bearish, the recent price action is perhaps proof that prices should never have really got this high in the first place.

The Nov/Jan inverse on the Paris market continues to erode, closing at just EUR1.50/tonne tonight with Nov/Mar down to EUR2.25, at the start of the month the latter was trading at EUR7.00/tonne.

The sudden surge in export activity that followed Russia's withdrawal from the market has dissipated. Egypt split what is now becoming it's routine weekly tender between US and French wheat. A sign that EU wheat doesn't have things all it's own way in the light of a weak dollar. Algeria have indicated that they are now covered until well into 2011.

The fact that London wheat shed so much despite the pound falling to it's lowest levels against the euro since May also speaks volumes.

Brussels have said it they will begin releasing intervention grain stocks onto the market starting in March 2011.

Crop conditions in the US and Canada have improved to facilitate decent harvest progress in the next fortnight if the forecasts hold true. Winter wheat plantings should also pick up.