EU Wheat Close

22/03/11 -- EU grains closed with Mar London wheat down GBP1.15/tonne at GBP192.00/tonne and with new crop Nov falling GBP3.625 to GBP156.00/tonne. May Paris wheat was down EUR1.00/tonne to EUR225.00/tonne and Nov fell EUR2.00/tonne to EUR201.50/tonne.

The pound and euro both rose to, or close to, their highest levels against the dollar in 14 months, putting EU wheat under pressure.

The pound was up after UK inflation came in at 4.4% last month, up from 4.0% in January and trade estimates of 4.2%. That increases the chances of a UK base rate increase, thereby supporting the pound.

Rumours of China buying large volumes of US corn on the back of the recent price break so far remain unconfirmed.

Whilst old crop wheat availability in Europe stays tight, the futures market here keeps following that in the US. Over there stocks are plentiful, with wheat from the 2008 and 2009 crop still kicking around.

Many are now reporting that the "old rules" relating to standard differentials between London futures prices and the cash market have been thrown out of the window.

"The European drought continues in France, Germany, Denmark, Sweden and the Low Countries all of whom have had very low rainfall in the past 60 days. The UK is moderately dry but generous Central Europe rain has been helpful in the past week," say Martell Crop Projections.