EU Wheat Close

02/12/10 -- EU wheat futures closed higher with Jan11 London wheat up GBP1.75 to GBP185.00/tonne and Nov11 London wheat up GBP1.95 to GBP156.00/tonne. Jan11 Paris wheat rose EUR4.75 to EUR233.75/tonne and Nov11 Paris wheat was up EUR3.00 to EUR209.50/tonne.

Futures closed a little off the days highs, which were set early on, on profit-taking. Even so London wheat posted new contract highs and the highest close for a front month since March 26th 2008.

The strong pace of EU exports continues unabated. Brussels issued export licences for 558,000 MT of wheat during the past week, that brings the cumulative total for the marketing year to date to 10.1 MMT, 40% up on this time last year.

Missing out on yesterday's Egyptian tender looks like a blessing in disguise at this rate.

Australia's wheat crop is going downhill rapidly in the east, with some reports suggesting that things are so drowned out that some of the crop there won't even be suitable for feeding. It is an enormous kick in the nether regions for farmers in the area who have struggled against drought over the past few years.

The harvest there is now running at least a month behind. Unlike in the UK, many growers are huge distances away from the few grain driers that they have Down Under. So sitting tight and waiting for nature to do it's job is the only really viable option for the majority of Australian farmers, according to Andrew Jurgs, grain analyst at Czarnikow.

There is clearly going to be a dearth of quality wheat available in the first half of 2011, with America looking like being the only volume long-holder.