EU Wheat Close

10/01/11 -- EU wheat closed mixed Monday with Jan London wheat unchanged at GBP195.60/tonne, and new crop Nov GBP0.85 lower at GBP167.75/tonne. Expiring Jan Paris wheat rose EUR2.00 to EUR258.00/tonne and Nov also climbed EUR2.00 to EUR228.50/tonne.

The euro fell to fresh 4 month lows against both the dollar and sterling on continued worries over EU debt, with Portugal becoming the new front runner to be expected to be forced into a handout situation from the EU/IMF.

That helped French wheat gain on London grain despite missing out in Egypt's weekend tender. French stocks look like being so tight come the end of the current marketing year that the odd missed export order could be a blessing in disguise.

French wheat was still USD10-15 cheaper on an FOB basis than US and Australian wheat was CIF. Whilst that rules out exports of 55-60,000 MT panamax sized vessels, it doesn't necessarily mean that smaller cargoes won't still find their way into North Africa and/or the Middle East.

In addition it also means that domestically prices could still rise further before imports become a more viable option.

In shades reminiscent of 2007/08 Algeria and Tunisia were the scene of repeated rioting last week between the police and demonstrators protesting against rapidly increasing food prices. Five people were reportedly killed in Algeria, while the Tunisian government reported 14 deaths.

The Algerian government has said that it will cut food prices by 14% and increase the amount of soft wheat it supplies to local markets.

Algeria immediately issued a tender to import at least 50,000 MT of soft wheat. Tunisia meanwhile bought 100,000 MT of wheat last Thursday.