EU Wheat Mostly Lower On Greek Jitters

09/05/12 -- EU grains finished mostly lower with May 12 London wheat closing down GBP1.00/tonne at GBP173.50/tonne, and Nov 12 falling GBP1.05/tonne to GBP148.90/tonne. May 12 Paris wheat bucked the trend and jumped EUR11.50/tonne to EUR228.50/tonne and new crop Nov 12 fell EUR0.75/tonne to EUR197.25/tonne.

May 12 Paris wheat goes off the board tomorrow, and clearly got very technical at the eleventh hour, so we shouldn't read too much into that. Old crop milling wheat delivered Rouen is trading around EUR205-207.00/tonne - the equivalent of around GBP165-166.00/tonne. New crop wheat to the same destination for July delivery is around EUR197.00/tonne - or just over GBP158.00/tonne.

The pound rose to fresh 3 1/2 year highs against the euro today as Greece is starting to look increasingly likely to baulk at any more austerity and select the default option. Meanwhile Spain says that it is to part nationalise it's fourth largest bank BFA-Bankia after the markets close tonight.

The repercussions over a possible Greek default are seeing spec money exit the grains market, especially ahead of the USDA's reports tomorrow which will include their first ever forecasts for 2012/12 crop production.

EU-27 crop conditions meanwhile have improved significantly in the past 4-5 weeks, with abundant rainfall across the UK, France and Spain. The western half of Germany has also received beneficial moisture, although further east and into Poland things are looking less rosy.

In the midst of their 2012 wheat harvest India’s food ministry report that the country’s food grain stocks as of May 1 are 71.1 MMT, more than three times the required buffer amount, with stocks likely to rise to 80 MMT as the harvest wraps up. They have today signed a trade agreement with Iran which will probably act as a precursor for them to export as much as 4 MMT of wheat to the Arab nation weighed down by sanctions from the West.

The US winter wheat harvest has already begun in periphery southern states and will soon be underway in the nation's largest producing state of Kansas, some 3-4 weeks earlier than normal. Bumper output is expected with crop conditions far better than they were a year ago.