London Wheat Falls As Greek Woes Hit Euro

01/11/11 -- EU grains finished mixed with Nov London wheat down GBP3.25/tonne to GBP147.75/tonne and Nov Paris wheat rising EUR0.75/tonne to EUR187.75/tonne.

Once again the Greek debt issue took centre stage sending the euro reeling, hence the disparity in performance between Paris and London wheat. The pound got within sight of 1.17 against the single currency as the Greek stock market fell 7.7%, with the French CAC and German DAX posting falls in excess of 5% on the day.

The differential between the cost of borrowing in Italy as opposed to Germany reached a fresh euro-era high today despite the ECB's best efforts in emerging as the sole buyer Italian bonds.

In addition to a severe dose of Greek and Italian jitters the market also remains badly spooked by the fallout from US brokerage firm MF Global filing for Chapter 11 bankruptcy yesterday. News today now suggests that the company broke the rules by not keeping it's customers cash separate from it's own, report the BBC.

How deep is this rabbit hole and what's at the bottom of it? Also could other financial institutions be in similar holes the market may be wondering.

Egypt snubbed French offers again today booking two cargoes of Russian and one of Ukraine wheat for January delivery.

The UK trade remains subdued with hand-to-mouth buying the only feature traders say. EU soft wheat exports meanwhile are currently running 44% down on year ago levels, far more than the 30% reduction that the USDA is predicting for 2011/12.