EU Grains Close

31/05/11 -- EU grains closed with July London wheat GBP3.50 lower at GBP193.00/tonne and with new crop Nov down GBP7.50/tonne to GBP189.50/tonne. Nov Paris wheat closed EUR1.00/tonne lower at EUR237.75/tonne whilst May12 fell EUR0.50/tonne to EUR238.75/tonne.

This was the first close below GBP190.00/tonne for Nov London wheat in a fortnight as it played catch-up following steep losses across the Channel yesterday after Russia announced that it was calling off it's grain export embargo.

For the month of May as a whole however Nov London wheat still posted impressive gains of almost GBP20.00/tonne, with Nov Paris wheat gaining EUR27.00/tonne.

Paris wheat did most of it's falling yesterday, closing with losses of 4.6% on the Nov contract over the two sessions since last Friday. London fared better by comparison, down 3.8% today. That would seem to suggest that Paris has fallen too much, or London not enough.

The over-riding concern with farmers in the UK, France and Germany for now seems to be over-selling their crops with huge clouds of uncertainty hanging over potential yields. New crop business has therefore ground to a trickle.

Nobody knows what to do, one merchant said to me the other day that he'd wouldn't be surprised to see London wheat at GBP150/tonne or GBP250/tonne come harvest. I know what he means.

Martell Crop Projections today report the GFS weather model predicting 0.75-1.5 inches of rainfall for France, Germany and the SE of the United Kingdom in the 4-day June 3rd-6th time frame (click image to enlarge).

Official crop estimates keep coming in generally much higher than some of the trade chatter of losses of up to 20%, or more in some cases. Toepfer for example peg the German wheat crop at 22.8-23.3 MMT vs. 24 MMT a year ago, a fall of "only" around 3-5%.