EU Debt Woes Usurp US Drought Concerns

23/07/12 -- EU grains finished mostly lower with Nov 12 London wheat down GBP4.00/tonne to GBP190.50/tonne and Nov 12 Paris wheat down EUR4.50/tonne at EUR265.25/tonne.

A worsening outlook over European debt managed to usurp what some are now calling the worst US drought in a generation.

Weekend media reports suggest that some Spanish provinces will need a bailout within days, and even Germany was warned by Moody's that it's AAA credit rating was under threat.

Spanish borrowing costs are now well above the 7% level, widely considered to be unsustainable, and the stock market regulator there was forced to introduce a ban on short selling after the recent slump in share prices.

Italian borrowing costs are also up as some of the larger European ships are listing badly, if not yet sinking.

Risk aversion is back on the agenda big time, drought or no drought, it would seem, and after the run up that we've had in the grain markets then it's only to be expected that we will see periods of consolidation like this. Particularly with a harvest underway.

Some early rapeseed was cut in the south east of the UK over the weekend I hear.

The French harvest is well advanced and progressing north, with yields said to be good. The weak euro should be an aid to their export prospects.