Nogger's Blog

05/09/11 -- Nov London wheat closed GBP2.85/tonne lower at GBP170.20/tonne and Nov Paris wheat fell EUR1.50/tonne to EUR206.75/tonne.

Paris wheat was trading modestly higher for much of the day on carry through impetus from a firm US close on Friday night and a weaker euro. It failed to hold onto those gains as the day wore on however as once again European debt concerns came to the forefront.

German Chancellor Angela Merkel's Christian Democrat party took a pasting in state elections over the weekend as the electorate there displayed their anger over her handling of the European debt crisis. Two thirds of the population are now said to be against further donations into the bailout fund.

Greece is in trouble for not meeting its austerity obligations within the pre-agreed timeframe and Italy appears to be having difficulty getting its own measures through parliament. Hence both it's and Spain's lending costs are on the up again.

The BBC report large amounts of foreign, much of it probably EU held, cash swapping sides of the Atlantic for America across the summer.

All of that suggests that the debt crisis here is very far from over, and that one default could trigger many more. Meanwhile where is the money going to come from to fund an EU economic recovery if it's already been syphoned off to America?

The US meanwhile have plenty of problems of their own as indicated by Friday's appalling jobs numbers.

Crude oil slumped the best part of three dollars/barrel, adding to losses of a similar magnitude on Friday. The FTSE100 ended with losses of almost 189 points (3.6%), with the Paris CAC40 down almost 150 points (4.7%) and the German DAX falling 292 points (5.3%). Shares in the banks took the biggest hit with the RBS plunging 12.3%.

There was no US market today due to the Labour Day holiday, trading will resume with the normal Globex session overnight. It remains to be seen if that can shrug off the strong negative bias of these outside influences and trade the more bullish US fundamentals.