EU Wheat Mostly Higher Ahead Of USDA Reports

08/11/11 -- EU grains ended mixed but mostly higher with Nov 11 London wheat up GBP0.75/tonne to GBP050.75/tonne and soon to expire Nov 11 Paris wheat EUR6.75/tonne firmer at EUR202.75/tonne.

Shorts on front month Nov 11 Paris wheat appear to be getting squeezed ahead of contract expiry on Thursday. Jan 12 was only EUR1.25/tonne higher at the close and is now a hefty EUR15.25/tonne discount to Nov 11, which makes little sense fundamentally.

Greece is already being regarded as old news as market attention now starts to focus on Italy where the yield on 10-year bonds today rose to another fresh euro-era high of 6.76%.

Despite his protestations to the contrary Italian Prime Minister Silvio Berlusconi may be forced to come cap in hand to the EU/IMF for a bailout rescue similar to that forced upon Greece, Ireland and Portugal when rates got this high. The main difference here though being that Italy's cap is far bigger than any of those were.

US winter wheat hasn't got off to a great start but "hard red winter wheat received beneficial heavy rainfall overnight in Kansas and Oklahoma, the number 1 and 2 top winter wheat states," say Martell Crop Projections.

"Hard red winter wheat ratings improved to 46% good-excellent, 39% fair and 15% poor-very poor...significantly better than last year on the same date which was 40% good-excellent, 41% fair and 19% poor-very poor," they add.

Tomorrow brings another raft of data from the USDA, although the numbers on wheat are less likely to be game changers than they could be for corn and soybeans.