EU Wheat Closing Comments

November London wheat closed GBP4.50 higher for the second session in a row at GBP165.00, and November Paris wheat closed EUR0.25 lower at EUR231.75.

London wheat was the days big gainer on follow through strength from a strong CBOT close on Friday night. With US markets closed for a holiday today EU wheat took centre stage and London gained on ideas it is too cheap relative to Paris wheat.

Sterling fell late in the morning on ideas that the Bank of England may have to consider increasing it's quantitative easing programme amidst signs that UK economic growth is slowing.

French wheat fell slightly on news that the Ministry there were increasing their production estimate for soft wheat by 500,000 MT to 35.7 MMT. The early harvest there also seems to have ensured that the vast majority of wheat there is of milling standard.

The French Ministry also slightly increased their production estimates for barley, corn and OSR from earlier forecasts.

Concerns remain however that the French are the only quality volume seller in Europe and that supplies there will be exhausted by early in 2011.

Excellent growing conditions in eastern Australia were improved further by significant weekend rains. They should have an excellent crop with one prominent forecaster predicting wheat output in NSW and Southern Australia state up by more than 50%. That should more than compensate for reduced production in Western Australia.