EU Grains Close

Posted by Nogger - a legend in his own mind at 19:09 | Categorized as

05/05/11 -- May London wheat closed GBP1.40/tonne lower at GBP203.00/tonne with new crop Nov down GBP0.55 to GBP167.60/tonne. May Paris wheat fell EUR3.00/tonne at EUR244.25/tonne whilst Nov was EUR1.00/tonne higher to EUR209.50/tonne.

Wheat closed well off session lows, surprisingly, which makes this look like a bit of a false close - so depending on overnight events that suggests to me that further losses are possible tomorrow.

Crude oil completely fell out of bed with Brent crashing through USD120/barrel to post losses of almost USD9/barrel by the time European markets closed. NYMEX crude, gas and heating oil all posted losses of 7-9% late in the day.

In addition we saw silver down 8.5%, with copper down 3.5% and gold falling 2.5%, with softs such as coffee, sugar and cocoa all losing around 2-5% in a broad commodity sell-off.

Both the BoE and the ECB left interest rates on hold in the UK and eurozone respectively. The pound rose close to 1.13 by the close of play, having traded as low as 1.1062 against the single currency earlier in the day. Dollar strength was also a feature.

Speculation that Russian grain stocks may be significantly higher than official estimates, prompting the government there to lift the export embargo sooner rather than later is also doing the rounds.

Rain is finally moving into the UK from the west, with more forecast over the next few days, although we haven't had anything resembling a drought-buster yet. France and Germany remain dry.

US wheat potential is poor. The second day of the Kansas wheat tour pegs yields there at 33.4 bushels an acre, down 16% on 39.9 bu/acre last year. Meanwhile, the Oklahoma Wheat Commission estimate the state's wheat crop at just 67.7 million bushels, down a stunning 44% from 120.9 million bushels in 2010.