EU Grains Close

11/07/11 -- EU grains closed mostly lower with Nov London wheat declining GBP2.25/tonne to GBP162.50/tonne and May 12 down GBP1.00/tonne to GBP169.00/tonne. Nov Paris wheat closed EUR4.00/tonne lower at EUR190.75/tonne whilst May 12 fell EUR3.75/tonne to EUR196.50/tonne.

Brighter prospects for Russian/Ukraine production weighed on EU wheat, with SovEcon upping their grain production forecast for the former to 87-92 MMT from 82-86 MMT.

Early yields are also better than expected in Ukraine, and recent rains may have boosted spring grains potential further. Winter grain yields so far are up 16% on last season.

It's not just the fact that yields and output are seen sharply higher in the FSU, it's the fact that these guys are normally the cheapest sellers in the market with Russia having easily picked up all three of the most significant tenders floating around last week.

European debt concerns remain, with the FT suggesting over the weekend that EU ministers may now consider some form of "selective default" by Greece. There are also renewed concerns over Italy getting dragged down into the abyss.

A weak euro and abundant Black Sea grain leaves UK wheat high and dry as far as export homes are concerned.

Maybe a reduced harvest in 2011 won't turn out to be as much as a problem after all?