EU Wheat Close

07/10/11 -- EU grains closed with Nov11 London wheat down GBP3.40/tonne at GBP146.75/tonne and Nov11 Paris wheat EUR3.25/tonne lower at EUR183.50/tonne.

Whilst these were not the lowest closes of the week they represent the lowest close for a front month on the weekly chart since July 2010. On the week as a whole Nov11 London wheat fell GBP3.90/tonne whilst Nov11 Paris wheat was unchanged.

News of a ratings downgrade for the RBS, Lloyds and Nationwide from Moody's sent their shares tumbling, raising fears that they may both need more government cash to keep afloat. Late in the day the Fitch agency also downgraded Italian and Spanish debt citing the "intensification" of the eurozone crisis.

BoE governor Mervyn King added to the gloom by saying that the current financial crisis could be the worst the UK has ever seen.

On the fundamental front there wasn't too much bullish news about either. Ukraine's parliament voted to abolish the existing duty on exports of corn and wheat with immediate effect. The will now join Russia and Kazakhstan to form a voracious grain exporting triumvirate.

Elsewhere the French Ministry upgraded their estimate for this season's soft wheat crop by 600,000 MT to 34.1 MMT. With a durum crop of around 2 MMT that gives us an all wheat production number of 36.1 MMT, 1.1 MMT higher than the USDA's current estimate.

In addition they increased their 2011 corn crop forecast by 800,000 MT to 14.9 MMT, which is now 700,000 more than the USDA said last month.

Across the pond a much-needed rain event is on the cards for the weekend. "Very heavy rain from recurring showers could bring 3-4 inches in portions of Oklahoma and Kansas," say Martell Crop Projections.

That would provide a major boost for winter wheat plantings and early crop development there.