EU Wheat Close

25/10/10 -- EU wheat futures closed mixed, but mostly higher, Monday with Nov10 London wheat down GBP0.75 at GBP161.00/tonne and Nov11 London wheat up GBP0.75 to GBP139.00/tonne. Nov10 Paris wheat closed EUR0.75 higher at EUR210.25/tonne and Nov11 Paris wheat was up EUR1.25 to EUR187.00/tonne.

The Nov10/Nov11 differential continues to narrow, with the gap in London now down to GBP22.00/tonne. As previously reported, there seem to be plenty of players now willing to bet that these prices are here to stay.

Demand from the bioethanol sector is one reason. In the UK we have a new refinery due to open in "mid-2011" with a wheat feedstock requirement of around 1.2 MMT per annum.

In Germany, the cabinet are due to vote on Wednesday to potentially double the maximum allowed inclusion level for bioethanol in blended fuel sold at the pumps from 5% to 10%.

Meanwhile EU and UK exports for the 2010/11 season so far continue to run well ahead of last year, meaning that availability could be very tight come the spring.

Ukraine winter grain plantings are late, but have pretty much caught up with the planned area, although this might cause problems if they get a harsh winter. In Russia winter sowings are still well behind.

Although some rain fell over the weekend in parts of the US Great Plains, drought was not resolved in Kansas, the leading US wheat state, say Martell Crop Projections.