EU Wheat Mixed, Egypt Situation Uncertain

31/01/11 -- Mar London wheat closed GBP0.15 lower at GBP203.10/tonne, with new crop Nov down GBP1.30 at GBP172.60/tonne. Mar Paris wheat rose EUR3.00 to EUR269.00/tonne, whilst new crop Nov gained EUR1.50 to EUR233.00/tonne.

A firmer pound was behind London wheat's fall, with sterling rising above 1.17 against the euro and over 1.60 against the dollar. Paris wheat rose as global supplies of quality wheat continue to tighten and foreign tenders keep coming in.

Uncertainty remains in the market over Egypt. They said over the weekend that the will continue to buy wheat in the usual manner, no more than that, and that they have six months worth of reserves anyway.

Jordan is tendering for 100,000 MT each of wheat and barley this week though, proving that there are still some buyers out there, even at these levels.

Asian buyers like the Philippines, Indonesia and Malaysia have all also reputedly bought US/Australian wheat over the weekend.

Brent crude oil rose above USD100/barrel this afternoon for the first time in 28 months on ideas that the escalating situation in Egypt may affect European supplies shipped via the Suez Canal. NYMEX crude was also sharply higher late in the day.

European weather is seen turning wetter this week, a not unwelcome development. More heavy rain is in the forecast for eastern Australia, although wheat harvesting here is just about over this may cause further logistical problems.

Rabobank has lowered it's Australian wheat production forecast to a rather low looking 22.7 MMT, more than 4 MMT less than the official ABARE estimate.