EU Grains Close: Greece Is The Word

24/06/11 -- EU grains finished mixed with July London wheat GBP0.15 higher at GBP162.65/tonne and with new crop Nov falling GBP0.60/tonne to GBP163.50/tonne. Nov Paris wheat closed EUR0.50/tonne higher at EUR195.75/tonne whilst May12 rose EUR1.00/tonne to EUR201.50/tonne.

It's been a bad week for wheat with old crop London wheat crashing GBP13.85/tonne and new crop Nov losing GBP11.00/tonne, or 6.3%. Nov Paris wheat fell through the EUR200.00/tonne level for the first time since the immediate aftermath of the Japanese earthquake back in March to close EUR14.50/tonne lower on the week, down 6.9%.

Stats Canada said that farmers there have planted 23.6 million acres of wheat, up 11.9 percent from last year despite widespread spring floods. They also pegged the rapeseed area up nearly 18 percent from last year to a record 19.8 million acres. Both figures are being taken with a pinch of salt by the trade as being way too optimistic given the extent of the flooding.

Brent crude oil slumped by more than USD2/barrel to a four month low, although the pound sinking below 1.60 to close at it's lowest level since the last day of January added some support to London wheat.

Concern over Greek debt has got the market running scared this week. "Investors pulled a net USD5.3bn from high-yield bond funds, their biggest weekly outflow on record," according to the Telegraph.

Getting next week's austerity measures passed by parliament is an enormous hurdle to get over. Without pushing them through they either won't get the next EUR12bn tranche of money due from the IMF/EU, or the latter will have to climb down and do an embarrassing (and precedent setting) u-turn.

Ukraine's harvest kicked off at the beginning of the week, and the combines have now also started rolling in the southern Rostov region of Russia. Both countries are expected a sharp rebound in grain production this year, and are keen to find willing buyers to take some of it off their hands.

Tunisia was first up to the plate this week, booking 75,000 MT of optional origin wheat at prices said to be around USD15/tonne cheaper than French wheat.