EU Wheat Rises On US Weather

12/07/12 -- EU grains closed higher with Nov 12 London wheat up GBP3.35/tonne to GBP185.75/tonne and Nov 12 Paris wheat EUR7.50/tonne firmer at EUR254.25/tonne.

The market is back on the up after yesterday's brief correction.

US weather and declining crop prospects out of the Black Sea continue to be the main drivers. Prospects for both look pretty bleak.

The Ukraine Ministry downgraded their 2012/13 grain export forecast to 20 MMT from 22-23 MMT previously. Earlier this week the Kazakh Ministry said that their grain harvest would halve this year, meanwhile early yields out of Russia are running 30-40% down on last year.

Closer to home, wet weather continues to hamper harvesting hopes in Europe, with milling wheat premiums rising on a daily basis.

Export interest at these levels though is hard to come by, with the world's top wheat importer Egypt saying it is likely to stay out of the market until August.

Brussels issued only 98,000 MT of soft wheat export licences for the first week of the 2012/13 marketing year, 11% less than in the same week a year ago, and hardly an inspiring total to set the ball rolling for the new campaign.

The spectre of a euro collapse has been pushed into the background, such is the uproar over the US drought, with every taxi driver and part time model now climbing onto the bandwagon - never a good sign.

Ratings agency Moody's cut Italy's credit rating two notches, adding that the risk of a Greek exit from the euro has risen.