EU Wheat: Frankenstein's Monster

14/03/11 -- EU wheat fell heavily again today with Mar London wheat ending down GBP3.50 to GBP178.35/tonne and new crop Nov down GBP2.50 to GBP151.00/tonne. May Paris wheat closed EUR6.25 lower at EUR216.75/tonne, with Nov down EUR4.00 closing just below the psychologically important EUR200.00/tonne level at EUR199.75/tonne.

This was the lowest close for a front month on London wheat and the first time that Nov Paris wheat has finished below EUR200.00/tonne since late November.

Paris rapeseed, corn and malting barley also took their by now regular daily beating, with the former down EUR18.00/tonne on the nearby May future at one stage during the day.

May London wheat traded GBP9.00/tonne lower at one stage and had the remaining incredulous bulls almost dancing in the streets at the close of play with a finish of "only" GBP3.50/tonne lower on the day.

The Libyan situation has been consigned to second fiddle in the fallout from the Japanese disaster. They are amongst the largest importers in the world of corn, wheat and soybeans - and are particularly heavy buyers of US grains.

The market remains divided on the implications of the latest developments, although most seem to agree that at least in the short-term Japanese demand for grains will be cut by around 10-20%.

Regardless of what the medium to longer-term affects might be it seems that right at this moment the spec money wants out of the monster that they have created.